LETTER-A

ABC Consumer Confidence

The U.S. Consumer Confidence Index (CCI) is an indicator designed to measure , which is defined as the degree of optimism on the state of the economy that consumers are expressing through their activities of savings and spending. Global consumer confidence is not measured.

ABN AMRO

ABN AMRO is a Dutch bank, currently owned by RFS Holdings B.V., a consortium of Royal Bank Of Scotland Group, the Government of the Netherlands, and Banco Santander. The bankwas created as the result of the 1990-91 merger between Amsterdam-Rotterdam (AMRO) Bank and ABN whose history dated back to the founding of the Nederlandsche Handel-Maatschappij in 1824.
Between 1991 and 2007, ABN AMRO was one of the largest banks and Europe and had operations in about 63 countries around the world.
In the biggest banking takeover in history, a consortium comprising, RBS,Fortis,and the Dutch government nationalised the divisions owned by Fortis, while the UK government is now in effective control over the divisions allocated to RBS due to its financial bail-out of the Scottish bank. The process of integrating some of ABN AMRO's divisions into the new owners, and divesting others, continues.

Absolute Return

The return that an asset achieves over a certain period of time. This measure looks at the appreciation or depreciation (expressed as a percentage) that an asset - usually a stock or a mutual fund - achieves over a given period of time.
Absolute return differs from relative return because it is concerned with the return of a particular asset and does not compare it to any other measure or benchmark.

ACCI

An arrangement by which an organization accepts a customer's financial assets and holds them on behalf of the customer at his or her discretion.

A statement summarizing the record of transactions in the form of credits, debits, accruals and adjustments that have occurred and have an affect on an asset, equity, liability or past, present or future revenue.

A relaying of happenings from one party to another.

Account

An arrangement by which an organization accepts a customer's financial assets and holds them on behalf of the customer at his or her discretion.

A statement summarizing the record of transactions in the form of credits, debits, accruals and adjustments that have occurred and have an affect on an asset, equity, liability or past, present or future revenue.

A relaying of happenings from one party to another.

Accrual Bond

A bond that does not pay periodic interest payments. Instead, interest is added to the principal balance of the bond and is either paid at maturity or, at some point, the bond begins to pay both principal and interest based on the accrued principal and interest to that point.

Actuals

The physical commodity that underlies a futures contract or is traded in the physical market. This is the homogeneous commodity that is the basis for trade, either through the physical market or a derivative contract such as oil, corn or gold.

Adjustable Peg

Exchange rate regimen where a currency's conversion rate is 'pegged' (fixed) in relation to a stronger currency (such as the US dollar or Euro). The pegged rate is adjusted occasionally in an attempt to improve the country's competitive position. This arrangement was the basis of the Bretton Woods system which prevailed during 1944 to 1971.

Adjustment

A deduction made to charge off a loss, as with a bad debt.

ADP

A unit of US-based Automatic Data Processing (ADP), Automatic Data Processing Limited, or ADP Europe, specializes in outsourced employer services such as payroll, benefits, and human resources management. It also offers information processing services for brokerage firms and car dealers. The company serves corporate clients throughout Europe and is one of the region's leading payroll services providers. ADP also does business in Europe through its ADP Clearing unit, which uses its MAESTRO software to process airline tickets worldwide.

Advance Retail Sales-United States

Consumer consumption in the U.S. is expected to improve for the second-consecutive month in June, with economists forecasting a 0.4% rise in retail sales, and the data could encourage an enhanced outlook for future growth as policymakers take unprecedented steps to stimulate the world’s largest economy. The international society of foreign exchange dealers consisting of national "Forex clubs" affiliated on a world wide basis.

ADX-Average Directional Index

An indicator used in technical analysis to determine the strength of a prevailing trend. The ADX is measured on a scale between zero and 100. Readings below 20 are used to indicate a weak trend, while readings over 40 indicate a strong trend. ADX is not used to determine the direction of a particular trend, but only to gauge its strength.

After-Hours Trading

After-hours trading (AHT) refers to the buying and selling of securities on major exchanges outside of specified regular trading hours. Both the New York Stock Exchange and the Nasdaq National Market operate from 9:30 a.m. to 4:00 p.m. EST. At one time limited to institutional investors and individual investors with high net worth, AHT is now an option for the average investor as well.

Agent Bank

A bank that has been authorized by an individual to act as his/her agent. An agent bank would typically provide services such as back-office operations, processing of credit applications, and verification services.

Aggregate Demand

A macroeconomic value equal to the sum of all personal consumption expenditures, business expenditures, and government expenditures in a particular time period.

Aggregate risk

The amount of exposure a customer has to the movement of spot contracts and forward contracts.

Aggregate Supply

A macroeconomic value equal to the sum of all goods and services produced in a particular time period.

Aggressor

Some one who trade with Aggresive mode

Agio

The percentage difference between the spot and forward rates of exchange between two countries.

AGM

Gathering of the directors and stockholders (shareholders) of every incorporated firm, required by law to be held each calendar year. Generally, not more than 15 months are allowed to elapse between two AGMs, and a 21-day's written notice of its date is required to be given to the stockholders. The main purpose of an AGM is to comply with legal requirements, such as the presentation and approval of the audited accounts, election of directors, and appointment of auditors for the new accounting term. Other items that may also be discussed include compensation of officers, confirmation of proposed dividend, and issues raised by the stockholders. Called annual meeting in the US.

AIG

American International Group, Inc. (AIG) (NYSE: AIG), a is an American insurance corporation. Its corporate headquarters are located in the American International Building in New York City. The British headquarters office is on Fenchurch Street in London; continental Europe operations are based in La Défense, Paris, and its Asian headquarters office is in Hong Kong. According to the 2008 Forbes Global 2000 list, AIG was once the 18th-largest public company in the world. It was listed on the Dow Jones Industrial Average from April 8, 2004 to September 22, 2008.

All Industry Activity Index - Japan

Evaluates the monthly change in overall production by all sectors of the Japanese economy. The Index comprises a variety of industries Ã¢?? service, manufacturing, construction and public sectors are all included. The index closely follows Japanese GDP and overall growth figures, providing insight into current levels of Japanese economic expansion. The All Industry Activity Index is posted monthly as a percentage change from the previous month's figure.

American Option

An option which can be exercised at any time between the purchase date and the expiration date. Most options in the U.S. are of this type. This is the opposite of a European-style option, which can only be exercised on the date of expiration. Since an American option provides an investor with a greater degree of flexibility than a European style option, the premium for an American style option is at least equal to or higher than the premium for a European-style option which otherwise has all the same features. also called American-style option.

Anonymous Trading

Visible bids and offers on the market without the identity of the bidder and seller being revealed.

ANZ Commodity Price Index - New Zealand

Measures the monthly price change of New Zealand 's seventeen main commodity exports. Given that the exports act as the driving force of New Zealand 's economy, changes in their prices can affect GDP and exchange rates. An increase in export prices may suggest a strengthening of the Dollar as foreigners pay relatively more for New Zealand 's exports. Conversely, falling export prices may indicate a decline in demand for New Zealand commodities; weakening the exchange rate.The headline value is the percentage change in the index from the previous month. Because the figure measures price changes in commodity goods, it acts as an early indicator of price changes. As such an early indicator the figure is useful in predicting future price direction.

ANZ Job Advertisements - Australia

The ANZ Bank job advertisement series measures the average weekly number of job advertisements placed in major metropolitan newspapers each months. for the ACT the series is based on the Number of job advertisements placed in The Canberra Times

All or None

A stipulation of a buy or sell order which instructs the broker to either fill the whole order or don't fill it at all; but in the latter case, don't cancel it, as the broker would if the order were fill or kill.

Appreciation

An increase in the value of an asset over time. The increase can occur for a number of reasons including increased demand or weakening supply, or as a result of changes in inflation or interest rates. This is the opposite of depreciation, which is a decrease over time.

Arbitrage

The simultaneous purchase and sale of an asset in order to profit from a difference in the price. This usually takes place on different exchanges or marketplaces.
Also known as a "riskless profit".

Arbitrage channel

The range of prices within which there will be no possibility to arbitrage between the cash and futures market.

Ascending Triangles

A price-chart pattern that indicates that a market is consolidating and is about to break out to either the upside or downside. Ascending triangles are identified by charting the closing prices of a stock, futures contract or other financial instrument in a technique called technical analysis.

Asian Option

The style or family of a financial option is a general term denoting the class into which the option falls, usually defined by the manner in which the option may be exercised. The two great families are european and american.

Ask

The price a seller is willing to accept for a security, also known as the offer price. Along with the price, the ask quote will generally also stipulate the amount of the security willing to be sold at that price.

Ask Price

Ask price, also called offer price, offer, asking price, or simply ask, is a price a seller of a good is willing to accept for that particular good.In bid and ask, the term ask price is used in contrast to the term bid price. The difference between the ask price and the bid price is called the spread.

Ask Rate

The lowest price at which a financial instrument is offered for sale

Ask Size

The number of shares that are being offered for sale at the ask price, often expressed in terms of hundreds of shares.

Ask-Offer

Offer is the price for traders to Sell the currency. In bid and ask / offer prices, the bid price stands in contrast to offer the price, or “tender”, and the difference between the two is called the bid/offer spread.

Asset

This converts particular assets of a company into liquid cash in exchange for a security interest to be paid to a bank or a financing company.

Asset Allocation

An investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance and investment horizon.
The three main asset classes - equities, fixed-income, and cash and equivalents - have different levels of risk and return, so each will behave differently over time.

Asset Swap

Similar in structure to a plain vanilla swap, the key difference is the underlying of the swap contract. Rather than regular fixed and floating loan interest rates being swapped, fixed and floating investments are being exchanged.

Assets

Assets are bought to increase the value of a firm or benefit the firm's operations. You can think of an asset as something that can generate cash flow, regardless of whether it's a company's manufacturing equipment or an individual's rental apartment.

Association Cambiste Internationale

The international society of foreign exchange dealers consisting of national "Forex clubs" affiliated on a world wide basis.

AT Best

An instruction to a broker or dealer to get the best price or rate that he/she is able to at that time.

At or Better

A type of securities or commodity order that specifies that the transaction occur only at the specified price or better.

At Par Forward Spread

A type of spread in which the spot price and the forward price of an option are equal.

At the Price Stop-Loss Order

A type of stop-loss order for which the transaction must be executed at specific price. At the price stop-loss orders are executed regardless of the market conditions.

At-the-Money

A condition in which the strike price of an option is equal to (or nearly equal to) the market price of the underlying security.

Auction

An auction in which an item is initially offered at a high price that is progressively lowered until a bid is made and the item sold.

Auction- Rate Securities

A method for selling an asset to the highest bidder.

Aussie

Similar to how the U.S. dollar is sometimes called the greenback or the Canadian dollar is called the loonie, the Australian dollar is sometimes called the Aussie to distinguish it from all the other dollars. It is also denoted as A$ or AU$.

Authorized Dealer

Any type of financial institution that has received authorization from a relevant regulatory body to act as a dealer involved with the trading of foreign currencies. Dealing with authorized forex dealers ensure that your transactions are being executed in a legal and just way.

LETTER-B

Back

To withdraw from a position.

Back Office

Administration and support personnel in a financial services company. They carry out functions like settlements, clearances, record maintenance, regulatory compliance, and accounting. When order processing is slow due to high volume, it is commonly referred to as "back office crunch."

Back Testing

The process of testing a trading strategy on prior time periods. Instead of applying a strategy for the time period forward, which could take years, a trader can do a simulation of his or her trading strategy on relevant past data in order to gauge the its effectiveness.
Most technical-analysis strategies are tested with this approach.

Back to Back

An intercompany loan channeled through a bank.

Backwardation

A theory developed in respect to the price of a futures contract and the contract's time to expire. Backwardation says that as the contract approaches expiration, the futures contract will trade at a higher price compared to when the contract was further away from expiration. This is said to occur due to the convenience yield being higher than the prevailing risk free rate.

Bail Out

A situation in which a business, individual or government offers money to a failing business in order to prevent the consequences that arise from a business's downfall. Bailouts can take the form of loans, bonds, stocks or cash. They may or may not require reimbursement.

Balance

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Balance of Trade

The difference in value between the total exports and total imports of a nation during a specific period of time.

Balance-of-Payments

A systematic record of a nation's total payments to foreign countries, including the price of imports and the outflow of capital and gold, along with the total receipts from abroad, including the price of exports and the inflow of capital and gold.

Band

A thin strip of flexible material used to encircle and bind one object or to hold a number of objects together.

Bank for International Settlements- BIS

The Bank for International Settlements (BIS) is a banker's bank. BIS serves the world's central banks as well as other official monetary institutions and nations. Serving some 140 financial institutions, BIS promotes cooperation among central banks, conducts economic research, and offers asset management, money market instruments, fixed-rate investments, foreign exchange, and short-term credit. The bank does not offer financial services to individuals or corporations. In addition to its head office in Basel, Switzerland, the bank has representative offices in Hong Kong and Mexico City. Founded in 1930, BIS is one of the world's oldest international financial institutions.

Bank holiday

A bank holiday is a public holiday in both the United Kingdom and Ireland. There is some automatic right to time off on these days, although the majority of the population not employed in essential services (e.g. utilities, fire, ambulance, police, health-care workers, London Underground) receive them as holidays; those employed in essential services usually receive extra pay for working on these days. Bank holidays are often assumed to be so called because they are days upon which banks are shut, but this is not in fact the case. Some of the assumed bank holidays are days on which the banks are shut but are not, in fact, a bank holiday (e.g. Good Friday and Christmas Day). Legislation does not allow certain payments to be deferred to the working day.

Bank Lending - Japan

The value of all outstanding loans with Japanese banks. Bank lending is important because lending increases with increased business confidence and investment. It is particularly insightful for the Japanese economy because of the weakness that has plagued the Japanese banking sector. The headline number is for total loans and discounts and is a percentage change from the previous year.

Bank Line

Bank's moral commitment to lend, as distinct from its contractual, legal, commitment; alternate name for a Line of Credit. A bank line is an indication of a bank's willingness to lend to a particular borrower up to a predetermined amount, usually for working capital purposes, and for a one-to-three-year period. The line is renewable at the option of the lender, so long as the borrower meets certain conditions, for example, agreeing to keep a portion of the line in a Compensating Balance with the lender to maintain the business in sound financial condition.

Bank Notes

Note issued by a bank representing its promise to pay a specific sum to the bearer on demand and acceptable as money. Also called bank bill.

Bank of England Meeting Minutes - United Kingdom

The Bank of England Monetary Policy Committee keeps notes from its rate decision meetings. The detailed minutes from these meetings give some of the best insight into the monetary policy decision making process and what the BOE thinks about economic developments inside and outside of the UK. Markets tend to focus most of their attention on the key points discussed during the meeting that suggest future interest rate changes. For example if the minutes state that high consumer spending and a rapidly expanding housing market are fueling inflation, then markets participants will tend to monitor these key sectors closely in order to gauge the likelihood of a rate increases in the future.

Bank Rate

The rate of discount established by a country's central bank.

Bar Chart

A graph consisting of parallel, usually vertical bars or rectangles with lengths proportional to the frequency with which specified quantities occur in a set of data. Also called bar chart.

Base Currency

Base Price

A base price is the price of the cost of a new car without getting any other options, just standard options. Nothing optional or anything like that.

Base Rate

In probability and statistics, base rate generally refers to the (base) class probabilities unconditioned on featural evidence, frequently also known as prior probabilities. For example, if it were the case that 1% of the public are "medical professionals" and 99% of the public are not "medical professionals," then the base rates in this case are 1% and 99%, respectively.

Basing

A fortified center of operations.

Basis

In linear algebra, a basis is a set of vectors that, in a linear combination, can represent every vector in a given vector space or free module, and such that no element of the set can be represented as a linear combination of the others. In other words, a basis is a linearly.

Basis Convergence

The process whereby the basis tends towards zero as the contract expiry approaches.

Basis Point

A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.

Basis Price

Price quotation for a security expressed in terms of yield to maturity. This will usually only be quoted on fixed-income securities such as bonds.

Basis Trading

Basis trading is an arbitrage strategy usually consisting of the purchase of a particular security and the sale of a similar security (often the purchase of a security and the sale of a corresponding futures contract).

Basket

An item resembling such a container in shape or function.

BBA

The leading trade association that represents the views of those involved in the banking and financial services industry within the U.K.

BCI-Business Cycle Indicator

Composite of leading, lagging and coincident indexes created by the Conference Board and used to forecast changes in the direction of the overall economy of a country. They can be used to confirm or predict the peaks and troughs of the business cycle and are published for the U.S., Mexico, France, the U.K., South Korea, Japan, Germany, Australia and Spain.

Bear

An investor who believes that a particular security or market is headed downward. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market.

Bear Call Spread

A type of options strategy used when a decline in the price of the underlying asset is expected. It is achieved by selling call options at a specific strike price while also buying the same number of calls, but at a higher strike price. The maximum profit to be gained using this strategy is equal to the difference between the price paid for the long option and the amount collected on the short option.

Bear Market

A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining. As investors anticipate losses in a bear market and selling continues, pessimism only grows. Although figures can vary, for many, a downturn of 20% or more in multiple broad market indexes, such as the Dow Jones Industrial Average (DJIA) or Standard & Poor's 500 Index (S&P 500), over at least a two-month period, is considered an entry into a bear market.

Beige Book - United States

Report on current economic conditions in each of the 12 Federal Reserve districts covering the entire US. Regional Banks in the Federal Reserve System gather anecdotal information based on surveys of executives, economist and market participants. The Beige Book summarizes this data into a relatively short document, giving a picture of economic trends and challenges faced by different parts of the nation. In addition to providing useful information on the economy, the report is also a window into how FOMC members may vote at the next interest rate policy meeting. Because each report is based on anecdotal information as much as statistics, it is subjective and may reflect opinions of district governors. As the only comprehensive report made available to the public, the Beige Book provides a rare opportunity for markets to better understand the Federal Reserve and its views on the economy.

Bid

An offer made by an investor, a trader or a dealer to buy a security. The bid will stipulate both the price at which the buyer is willing to purchase the security and the quantity to be purchased.

Bid Price

The price a buyer is willing to pay for a security. This is one part of the bid with the other being the bid size, which details the amount of shares the investor is willing to purchase at the bid price. The opposite of the bid is the ask price, which is the price a seller is looking to get for his or her shares.

Bid-Offer Spread

The bid/offer spread (also known as bid/ask or buy/sell spread) for securities (such as stock, futures contracts, options, or currency pairs) is the difference between the price quoted by a market maker for an immediate sale (bid) and an immediate purchase (ask). The size of the bid-offer spread in a given commodity is a measure of the liquidity of the market and the size of the transaction cost.

Bid/Ask Spread

The amount by which the ask price exceeds the bid. This is essentially the difference in price between the highest price that a buyer is willing to pay for an asset and the lowest price for which a seller is willing to sell it.

Big Figure

The stem, or whole dollar price, of a quote, often used in reference to foreign currencies or money markets.

Bilateral Clearing

The system of annual settlements of accounts between certain countries, where accounts are settled by the central banks.

BIS - Bank for International Settlements

The bis is an international organisation which fosters cooperation among central banks and other agenicies in pursuit of monetary and financial stability . its bank services are provide exculsively to central banks and international organisations.

Black-Scholes Model

A financial model of the variations over time in (for example) the price of stocks on the stock market. The model, proposed in 1974, is based on the notion that the underlying price variations could be modelled as Brownian motion.

Blocked Currency

Any currency that is mainly used for domestic transactions and does not freely trade on a forex market (usually due to government restrictions). Also referred to as a "nonconvertible currency".

Blotter

A book containing daily records of occurrences or transactions.

blue chips

A stock that sells at a high price because of public confidence in its long record of steady earnings.

BoC=Bank of Canada

The central bank of Canada, that came into existence after the passing of the Bank of Canada Act in 1935, influences the country's economy and money supply.

BoJ=Bank of Japan

Founded in 1882 as Japan's central bank, the Bank of Japan primarily issues banknotes and acts as a treasurer for the government. It is responsible for implementing lending rate changes as well as maintaining fluctuations in reserve requirements. The bank's mission is also to compile data and perform research and analysis pertaining to the overall economy. The Bank of Japan maintains a so-called "quantitative easing monetary policy" within the nation's economy, meaning it injects the financial market with excess funds hoping to stimulate economic recovery; however, due to some criticism, the bank might be tightening its fiscal policies in the future.

Bollinger Bands

Because standard deviation is a measure of volatility, Bollinger bands adjust themselves to the market conditions. When the markets become more volatile, the bands widen (move further away from the average), and during less volatile periods, the bands contract (move closer to the average). The tightening of the bands is often used by technical traders as an early indication that the volatility is about to increase sharply.

Bond

A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing.

Book

A set of written, printed, or blank pages fastened along one side and encased between protective covers.

Booked

Reserved in advance; held for future use. See reserve

BOP

A systematic record of a nation's total payments to foreign countries, including the price of imports and the outflow of capital and gold, along with the total receipts from abroad, including the price of exports and the inflow of capital and gold.

BRC

Promotion reply postcard preaddressed to the mailer and usually sent as permit mail, requiring no postage payment by the responder. Mailers pay a fee of approximately $400 per year for a business reply permit. Business reply cards, which are mailed at First-Class postage rates.

BRC Shop Price Index - UK

A monthly indicator of price changes at the most popular retail outlets in the United Kingdom. The index takes into account five hundred of the most commonly purchased goods and gives insight into consumer-price inflation. Shop Prices differentiate themselves from British CPI by coming out days before the headline inflation figure. Increases in the BRC Shop Price Index are bullish for the Pound, given that the Bank of England usually raises interest rates to control inflation reflected in the BRC. Conversely, a falling BRC Shop Price Index suggests falling price pressures.

Break Out

Technical analysis term used to describe price action rising above resistance or dropping below support. Breakouts may come through the continuation of an exiting natural trend, or after new information has been made available to the market

Break-Even Point

The price at which an option's cost is equal to the proceeds acquired by exercising the option. For a call option, it is the strike price plus the premium paid. For a put option, it is the strike price minus the premium paid.

Bretton Woods

An agreement struck in the summer of 1944, in which the U.S., the U.K., and their wartime allies set up the rules for the post-World War II monetary system. The meeting set the structure for the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which in the U.S. is more commonly known as the World Bank.

Bretton Woods Accord of 1944

The Bretton Woods Accord was established in 1944, towards the end of World War II. The United Nations Monetary Fund convened in Bretton Woods, New Hampshire, with representatives from the United States, Great Britain and France. The Bretton Woods Accord established the policy of pegging currencies against the U.S. dollar in order to stabilise the global economy. It set fixed exchange rates for major currencies and subsequently established the International Monetary Fund (IMF).Up until WWII, the British Pound was the the dominant world currency by which most currencies were compared. However, during World War II the Nazis undertook a major counterfeiting effort against the British Pound, and thus damaged it's standing. In contrast, WWII transformed the U.S. dollar from a failed currency after the stock market crash of 1929 to benchmark currency by which most other international currencies were compared. The U.S. economy was thriving, and the United States emerged as a world economic power. The first element of the Bretton Woods Accord was to peg the U.S. dollar to the price of gold at $35.00 an ounce, using the Gold Standard. With this benchmark anchoring the U.S. dollar, other major currencies were pegged to it and allowed to fluctuate no more than 1% on either side of the set standard. When a currency's exchange rate would approach the limit on either side of this standard the respective nation's central bank would intervene to bring the exchange rate back into the accepted range. The Bretton Woods Accord governed currency relationships until the early 1970's when a floating exchange rate system was adopted.

British Retail Consortium-BRC

Trade association for the UK retail industry. Includes news, details of policy work, events, and business information.

Broad Liquidity

A category of the money supply which includes: all funds in M3, individual holdings in accounts, savings bonds, T-bills with maturity of less than one year, commercial papers, and banker's acceptances.

Broken Dates

Term used in Foreign Exchange trading and the Euromarket for a forward exchange contract or money market contract with delivery of currency, CDs, and so on, to take place on a nonstandard date; for example 28 days instead of 30 days. Also called cock date.

Broker

An individual or firm which acts as an intermediary between a buyer and seller, usually charging a commission. For securities and most other products, a license is required.

Brokerage

Used interchangeably with broker when referring to a firm rather than an individual. also called brokerage house or brokerage firm.

BSA

Government legislation that was created in 1970 to prevent financial institutions from being used as tools by criminals to hide or launder their ill-gotten gains. This is achieved by requiring banks and other financial institution to provide documentation (such as currency transaction reports) whenever clients deal with transactions that involve substantial sums of money ($10,000 or more) that appear to be suspicious. This way, authorities have the ability to easily reconstruct the entire situation.

BSI

British Standards Institution wants to help keep business practices and products up to snuff. Doing business as BSI Group, the not-for-profit enterprise works with industry leaders and international groups to set and maintain industry standards. Its British Standards unit helps draft and market both UK and international specifications and guidelines, such as ISO standards. Its Management Systems unit offers certification services to customers in more than 120 countries, and BSI Product Services tests products in a wide range of industries. The group also provides training services and conducts conferences. BSI Group was founded in 1901.

BUBA

Nickname given to Bundesbank, the Central Bank of Germany.

Bull

An investor who believes that a particular security, a sector, or the overall market is about to rise. opposite of bear.

Bull Market

A prolonged period in which investment prices rise faster than their historical average. Bull markets can happen as a result of an economic recovery, an economic boom, or investor psychology. The longest and most famous bull market is the one that began in the early 1990s in which the U.S. equity markets grew at their fastest pace ever. opposite of bear market.

German central bank with headquarters in Frankfurt. Like the US Federal Reserve System (The Fed), it is owned by private banks.

Business Climate

General economic environment comprising of the attitude of the government and lending institutions toward businesses and business activity, attitude of labor unions toward employers, current taxation regimen, inflation rate, and such.

Business Conditions Survey

A survey of businesses in the manufacturing industry that gives an early indication of price direction, employment levels, and general business conditions. The survey covers manufacturers in the Third Federal Reserve District, which is headquartered in Philadelphia and includes the eastern two-thirds of Pennsylvania, southern New Jersey, and Delaware. The data is released at the end of the month that has been surveyed. Traders in the financial markets pay attention to the survey because it may give early insight into what other, broader manufacturing surveys, such as the ISM Index, will show. However the Philadelphia Fed Survey usually isnÂ’t a market-moving release. The data is presented as a diffusion index for current conditions and a six-month outlook

Business Cycle Indicator-BCI

Composite of leading, lagging and coincident indexes created by the Conference Board and used to forecast changes in the direction of the overall economy of a country. They can be used to confirm or predict the peaks and troughs of the business cycle and are published for the U.S., Mexico, France, the U.K., South Korea, Japan, Germany, Australia and Spain.

Business Inventories

A detailed, itemized list, report, or record of things in one's possession, especially a periodic survey of all goods and materials in stock.

Buy and Hold

A passive investment strategy in which an investor buys stocks and holds them for a long period of time, regardless of fluctuations in the market. An investor who employs a buy-and-hold strategy actively selects stocks, but once in a position, is not concerned with short-term price movements and technical indicators.

buy in

Options trading: procedure whereby the responsibility to deliver or accept stock can be terminated. In a transaction called buying-in or closing purchase , the writer buys an identical option (only the premium or price is different). The second of these options offsets the first, and the profit or loss is the difference in premiums.Securities: transaction between brokers wherein securities are not delivered on time by the broker on the sell side, forcing the buy side broker to obtain shares from other sources

Buy Limit Order

To avoid buying or selling a stock at a price higher or lower than you wanted, you need to place a limit order rather than a market order. A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. When you place a market order, you can't control the price at which your order will be filled.

Buy On Margin

Buying an asset by making an initial payment-called the Margin-and borrowing the balance needed to cover the purchase price from a bank or broker. When securities or commodities are purchased on margin, there is no need to borrow any funds from a bank or broker to cover the rest of the cost. The margin represents a down payment. There are numerous examples: buying a house by making a down payment and financing the rest through a mortgage, buying securities through a broker, and so on. In securities purchasing, the amount of margin needed is regulated by the Federal Reserve Board.

Buy stop

Always placed above the current market price.Used to limit the potential loss on a short position.

Buy Stop Order

An order to buy a security which is entered at a price above the current offering price. It is triggered when the market price touches or goes through the buy stop price.

Buyer's Market

A market condition characterized by low prices and a supply of commodities exceeding demand

Buying Rate

The price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another. For example, the higher the exchange rate for one euro in terms of one yen, the lower the relative value of the yen.

Buying Selling FX

foreign exchange (FX) The currencies of foreign countries, as bought and sold on a foreign-exchange markets. Firms or organizations require foreign exchange to purchase goods from abroad or for purposes of investment or speculation.

LETTER-C

Cable

In the context of the forex market, the exchange rate between the U.S. dollar and the British pound sterling. Because it is the norm in forex for most major currencies to be quoted against the U.S. dollar on a regular basis, "cable" is a commonly used term.

"Cable" can also be used to refer simply to the British pound sterling.

Cable Transfer

The origins of this term are attributed to the fact that in the 1800s, the dollar/pound sterling exchange rate was transmitted via transatlantic cable.Forex brokers are sometimes referred to as "cable dealers".

Cable/Sterling

Monetary unit of the United Kingdom, including Great Britain.

Calendar Spread

An options or futures spread established by simultaneously entering a long and short position on the same underlying asset but with different delivery months. Sometimes referred to as an interdelivery, intramarket, time or horizontal spread.

Call

In some exchanges, the call period is an important time in which to match and execute a large number of orders before opening and closing. A call becomes more valuable as the price of the underlying asset (stock) appreciates.

Call Option

An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period

Call Rate

Call rate is the inter-bank interest rate on funds that are not deposited for a fixed period. It relates to amount deposited for an indefinite time with a bank.

Cambist

A banker; a money changer or broker; one who deals in bills of exchange, or who is skilled in the science of exchange.

Candlestick Chart

A candlestick chart is a style of bar-chart used primarily to describe price movements of an equity over time.It is a combination of a line-chart and a bar-chart, in that each bar represents the range of price movement over a given time interval. It is most often used in technical analysis of equity and currency price patterns. They appear superficially similar to error bars, but are unrelated.

Cap

Small public companies having a market capitalization below $50 million.

Cap-An abbreviation for capitalization

You will hear companies referred to as "small-cap", "mid-cap" and "large-cap". You will also hear about "micro-caps", which are even smaller than small-caps. "Cap" isn't as mysterious as it sounds: it's definition is short for "capitalization", which is the total value of the corporation's existing stock. If my hypothetical, nanno-micro-cap has 200 shares and trades at $8 a share, you could define my market cap as a whopping $1,600. As you can see, the market cap of a company can change from moment to moment as its share prices rise and fall on the tides of time. Because it's based on what people expect to come about, (people pay for stock).

when they think its value will increase), it's somewhat arbitrary. But, because the entire stock market is based on things like consumer confidence and supply and demand, it's also somewhat arbitrary, although it still manages to operate like something real, and brings about tangible rewards and successes to the ones who play the game.

Capacity utilization

Capacity utilization is a concept in economics which refers to the extent to which an enterprise or a nation actually uses its installed productive capacity. Thus, it refers to the relationship between actual output that 'is' produced with the installed equipment and the potential output which 'could' be produced with it, if capacity was fully used.

Capacity Utilization Rate - Canada

A metric used to measure the rate at which potential output levels are being met or used. Displayed as a percentage, capacity utilization levels give insight into the overall slack that is in the economy or a firm at a given point in time. If a company is running at a 70% capacity utilization rate, it has room to increase production up to a 100% utilization rate without incurring the expensive costs of building a new plant or facility.

Capex-Capital Expenditure

Capital Expenditures Refers to the cost of developing a product or system. OPEX (operating expenditures) are the ongoing costs for running it. For example, the purchase of a printer is the CAPEX, and the annual paper and ink cost is the OPEX. For larger systems, OPEX may also include the cost of human operators and facility expenses such as rent, electricity, heating and air conditioning.

Capital Investment-Germany

In times of a continuously expanding proliferation of investment and financing possibilities in the hands of banks, investment funds and individual capital investors, particular attention should be paid to the effects that new financial instruments are likely to have not only on concrete financing and investing modes but also on the further development of legal rules in this field. As the German capital market has been considered unable - at least until the widely marketed Deutsche Telekom IPO - to get rid of its persisting prejudice of being structurally lagging behind other countries' systems (2), the legal treatment of emerging financial instruments deserves greatest attention. (3) The rocket science of new financial instruments challenges law's aim to rightly assess the real quality of these instruments and to strike an adequate balance between the interests involved against a national policy background and EU demands. (4) While the past few years have been a time of great legislative activity in the field of company and capital market law in Germany (5), only a closer look at court decisions reveals the true pressure resulting from a fast moving capital market on traditional legal perceptions. The so-called Aktienanleihe-Decision by the Federal Court of Justice, [FCJ] (Bundesgerichtshof - BGH) of 12 March 2002 marks an important step in the ongoing process of Germany's developing capital market law.

Capital Account

An account stating the amount of funds and assets invested in a business by the owners or stockholders, including retained earnings.
A statement of the net worth of a business at a given time.

capital expenditure -CAPEX

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. This type of outlay is made by companies to maintain or increase the scope of their operation. These expenditures can include everything from repairing a roof to building a brand new factory.

Capital Flow

Owner's share in a business plus operating profit or surplus, financing its long-term growth. Also called contributed capital or owner's equity. See alsoNet Worth; Paid-in Capital.

Capital Gain

The amount by which proceeds from the sale of a capital asset exceed the original cost.

Capital Loss

Capital loss is the difference between a lower selling price and a higher purchase price, resulting in a financial loss for the seller. Pursuant to IRS TAX TIP 2009-35 "If your capital losses exceed your capital gains, the excess can be deducted on your tax return, up to an annual limit of $3,000 ($1,500 if you are married filing separately)."

Capital Markets

Markets where capital, such as stocks and bonds, are traded.

Capital Risk

The risk an investor faces that he or she may lose all or part of the principal amount invested. The risk a company faces that it may lose value on its capital. The capital of a company can include equipment, factories and liquid securities.

Capital Spending

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. This type of outlay is made by companies to maintain or increase the scope of their operation. These expenditures can include everything from repairing a roof to building a brand new factory.

Capping

The investor who might practice capping is a call option writer. If practicing capping, he or she is trying to avoid having to transfer the underlying security or commodity to the option holder. The goal is to have the option expire worthless so that the premium initially received by the writer is protected.

Carry

A futures market in which the price difference between contracts with two different delivery months equals the full cost of carrying the commodity from the delivery month of the first contract to the next. Carrying costs include interest, insurance and storage. Also known as "full carry market" or "full carrying charge market".

Carry Trade

A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. A trader using this strategy attempts to capture the difference between the rates - which can often be substantial, depending on the amount of leverage the investor chooses to use.

Carry-Over Charge

The carry-over charge is one of the finance charges that is associated with the storage of commodities or foreign exchange contracts. Specifically, a carry-over charge is applied when the original delivery date on the commodity is revised to a later date. The exact amount of the charge is determined by several factors, including the amount of time involved between the original and revised delivery date, and any shifts in costs of maintenance of the commodity during that time frame.

Cash

Money in the form of bills or coins; currency. Payment for goods or services in currency or by check.

Cash and Carry
Sold for cash, usually without delivery service.

Cash Market

A cash market may take the following forms: self-regulated centralized markets, such as commodity exchanges; decentralized over-the-counter markets where private transactions may occur; or localized community organizations, such as grain elevators. At these locations, you can purchase the actual physical commodity rather than just the futures contract.

Cash Settlement

A settlement method used in certain future and option contracts whereby, upon expiry or exercise, the seller of the financial instrument does not deliver the actual but transfers the associated cash position.

CBI

A survey of senior manufacturing executives on trends in output, prices, exports, and costs.

CBI Industrial Trends Survey - UK

The CBI Industrial Trends Survey collects data on topics like current business confidence, capacity utilization, and investment intentions. The survey differs from most other economic surveys in that it focuses on the opinions of executives rather than quantitative data.

CBOE

First there was one. The Chicago Board Options Exchange (CBOE) may no longer be the only options exchange, but it's still the US leader in overall volume. Member-owned and founded in 1973 by the Chicago Board of Trade (which is now part of CME Group), CBOE lists options on more than 1,900 stocks, as well as on interest rates, broad-based stock indexes (such as Standard & Poor's S&P 500 Index), and industry indexes. CBOE, which had already launched the fully electronic CBOE Futures Exchange, debuted its CBOE Stock Exchange in early 2007, going head-to-head with the New York Stock Exchange and NASDAQ. CBOE also runs The Options Institute, which trains brokers and investors in all aspects of options

CBOT or CBT

Chicago Board of Trade (CBOT) is one of the busiest commodities exchanges in the world. The Board of Trade has more than 3,600 members, who trade almost 50 different futures and options products, including U.S. Treasury bonds, silver, soy beans, wheat, and Dow Jones Industrial Average futures. Annual trading volume is more than 200 million contracts. The CBOT operates as a not-for-profit corporation run by its members and a Board of Directors. Trades are accomplished through a so-called open outcry system, where traders meet face-to-face to make transactions in trading rooms known as pits. The CBOT adopted a computerized trading system for some trades in the late 1990s. Open outcry trading fell out of use at other leading exchanges in the 1990s, and the future of CBOT's trading pits was increasingly called into question. By the early 2000s, the future direction of the CBOT was still under consideration. The CBOT announced a decision to transform itself into a for-profit corporation with two separate trading areas, one electronic and one open outcry. This restructuring was bogged down by negotiation and litigation between the CBOT and the other Chicago exchanges, the Chicago Board Option Exchange and the Chicago Mercantile Exchange, and by indecision on the part of CBOT members and executives. As of March 2001, the CBOT planned to move ahead with restructuring and to form an alliance with the electronic German/Swiss exchange Eurex.

Central Bank

A nation's principal monetary authority, such as the Federal Reserve Bank, which regulates the money supply and credit, issues currency, and manages the rate of exchange.

CEO=Chief Executive Officer

Abbreviated as CEO. The executive who is responsible for a firm's operations, generally the President or the Chairman of the Board.

Certificate of Deposit

A certificate from a bank stating that the named party has a specified sum on deposit, usually for a given period of time at a fixed rate of interest.

CET

Uniform duty rate (customs duty) adopted by a common market or trading pact group to be assessed on imports from countries outside that market or group.

CFD=Contract For Difference

An arrangement made in a futures contract whereby differences in settlement are made through cash payments, rather than the delivery of physical goods or securities.

CFTC

The Commodity Futures Trading Commission (CFTC) tries to ensure the integrity of the commodity and financial futures markets. It protects the public and market users from fraud, manipulation, and abusive practices while fostering an open marketplace for trading commodity futures as well as foreign currency, US and foreign government securities, and US and foreign stock indices. CFTC develops trading policy, conducts research, evaluates filings, investigates fraud and manipulation, and prosecutes violators from offices in Chicago; New York; Kansas City, Missouri; and Washington, DC. Congress created the independent agency in 1974.

CGPI -Capital Goods Price Index

Measures the rate of inflation experienced by corporations. This data is based on a fixed baskets of goods and services and is calculated on a month-by-month basis.

CHAPS

Clearing House Automated Payment System. A company that operates a computer system to perform clearing services for funds and some other investment vehicles denominated in the British pound. It is allied with other clearing houses in the Association for Payment Clearing Services. It began operations in 1984.

Chartist

A person who uses charts for technical analysis System in the UK for making cash payments in sterling. The recipient receives same day funds.

CHIPS

Clearing House Interbank Payment System (CHIPS) Electronic means of settling banking payments in New York.

CIBOR

The rate at which the banks lend the Danish krone on an unsecured basis. The rate is calculated daily by the Danmarks Nationalbank.

Civic Federation

The Civic Federation is a non-partisan government research organization working to maximize the quality and cost-effectiveness of government services in the Chicago region.

Claimant Count Rate

The Housing Market Index is data from a survey of home builders reflecting single-family home sales on the present, the next six months and traffic from prospective buyers. This composite index indicates housing market trends. This provides a gauge of not only the demand for housing, but consumer sentiment as well. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and investments. Each time the construction of a new home begins, it translates to more construction jobs, and income which will be pumped back into the economy. Once a home is sold, it generates revenues for the home builder and the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items new home buyers might purchase. The economic "ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month.

Clean float

Market condition in which the value of a nation's currency in relation to other currencies is determined purely by free market forces. There are almost no cleanly floating Western currencies, i.e., currencies that are not supported one way or another through Intervention by central banks. Currencies that trade with a minimum of intervention by central banks or central monetary authorities are the Swiss franc, the German deutschmark, and the Canadian dollar.

Clearing

The procedure by which an organization acts as an intermediary and assumes the role of a buyer and seller for transactions in order to reconcile orders between transacting parties.

clearing house

An agency or separate corporation of a futures exchange responsible for settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery and reporting trading data. Clearing houses act as third parties to all futures and options contracts - as a buyer to every clearing member seller and a seller to every clearing member buyer.

Closing a Position

The act of taking the opposite position of the current position thereby getting out of a position in a particular stock or security.

Also referred to as "Closing Transaction."

Closing Market Rate

The rate at which a position can be closed based on the market price at end of the day Closing price. The final price at which a security is traded on a given trading day.

Closing Price

The price of the last transaction for a given security at the end of a given trading session. also called close.

Closing Purchase Transaction

The final transaction for a particular security during a trading day. Compare opening transaction. An option order that eliminates or decreases the size of an existing option position. An investor who repurchases three options that have been sold short is entering into a closing transaction. Also called closing purchase, closing sale. Compare opening transaction. See also close a position.

A line used in the capital asset pricing model to illustrate the rates of return for efficient portfolios depending on the risk-free rate of return and the level of risk (standard deviation) for a particular portfolio.

Coincidence Indicator Index

An economic factor that varies directly and simultaneously with the business cycle, thus indicating the current state of the economy.

Coincident Index - Japan

The data reinforced the market view that the Bank of Japan is likely to sit tight on monetary policy for the rest of the year in view of a global economic slowdown and high energy costs.

"The coincident index underscored the possibility that the economy peaked in the final quarter of last year and may have entered a recession in the economic cycle," said Junko Nishioka, economist at the Royal Bank of Scotland.

The Cabinet Office said the economy was "deteriorating", adding that this was a provisional judgment that the economy is likely in a recession.

Coincident Indicator

An economic factor that varies directly and simultaneously with the business cycle, thus indicating the current state of the economy.

Collateral

An economic factor that varies directly and simultaneously with the business cycle, thus indicating the current state of the economy.

Comex

The primary market for trading metals such as gold, silver, copper and aluminum. Formerly known as the Commodity Exchange Inc., the COMEX merged with the New York Mercantile exchange in 1994 and became the division responsible for metals trading.

Commercial Paper

Short-term, unsecured, discounted, and negotiable notes sold by one company to another in order to satisfy immediate cash needs.

Commission

A service charge assessed by a broker or investment advisor in return for providing investment advice and/or handling the purchase or sale of a security. Most major, full-service brokerages derive most of their profits from charging commissions on client transactions. Commissions vary widely from brokerage to brokerage.

Commodity

A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade.

Commodity Futures Trading Comission

The Commodity Futures Trading Commission (CFTC) tries to ensure the integrity of the commodity and financial futures markets. It protects the public and market users from fraud, manipulation, and abusive practices while fostering an open marketplace for trading commodity futures as well as foreign currency, US and foreign government securities, and US and foreign stock indices. CFTC develops trading policy, conducts research, evaluates filings, investigates fraud and manipulation, and prosecutes violators from offices in Chicago; New York; Kansas City, Missouri; and Washington, DC. Congress created the independent agency in 1974.

Company Operating Profit-Australia

The difference between a company's revenues and any related costs and expenses, not including income or expenses from any sources other than its normal methods of providing a good or a service

Composite Index of Leading Indicators

The Composite Index of Leading Indicators is a number that is used by many economic participants to judge what is going to happen in the near future. By looking at the Composite Index of Leading Indicators in the light of business cycles and general economic conditions, investors and businesses can form expectations about what's ahead, and make better-informed decisions.

Compound Option

This type of option usually exists for currency or fixed-income markets, where an uncertainty exists regarding the option's risk protection capabilities. The advantages of compound options are that they allow for large leverage and they are cheaper than straight options. However, if both options are exercised, the total premium will be more than the premium on a single option.

Concerted Intervention

Simultaneous intervention in foreign exchange markets by several central banks by buying or selling a currency. Concerted intervention is usually to support one central bank which is trying to maintain a target rate for its currency or is trying to slow the rate at which it is rising or falling. The intervention may be designed to strengthen or weaken a currency as a matter of deliberate policy, or to fight off speculative currency flows.

conference board

A not-for-profit research organization for businesses that distributes information about management and the marketplace. It is a widely quoted private source of business intelligence.

Confirmation

A confirmation strengthens the implication of technical indicators. When a confirmation occurs, traders become more confident that the predicted trend will occur. If there is no confirmation, there is divergence.

Construction output

This report analyses the market for electrical contracting. We estimate the output value of this market in Great Britain to have been £12.85bn in 2008 — an increase of 1.3% compared with the previous year. Electrical contracting is an important part of the construction industry and covers the installation of fixed electrical wiring and fittings for electrical power, lighting, alarms, security systems and communications equipment.

Consumer Confidence Index

A measure of consumer optimism toward current economic conditions. The consumer confidence index was arbitrarily set at 100 in 1985 and is adjusted monthly on the basis of a survey of about 5,000 households. The index considers consumer opinion on both current conditions (40% of the index) and future expectations (the other 60%). The Consumer Confidence Index is closely watched because many economists consider consumer optimism an important indicator of the future health of the economy.
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Consumer Credit

Debt assumed by consumers for purposes other than home mortgages. Interest on consumer loans had been 100% deductible until the tax reform act of 1986 mandated that the deduction be phased out by 1991. Consumers can borrow through credit cards, lines of credit, loans against insurance policies, and many other methods. The Federal Reserve Board releases the amount of outstanding consumer credit on a monthly basis.

Consumer Price Index

CPI. An inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation. The CPI is published monthly. also called cost-of-living index.

Consumer sentiment

The degree of optimism that consumers are expressing for the state of the economy through their saving and spending activity.

consumer spending

Good and services bought by households in the satisfaction of their needs and wants. It includes non-durables such as food, semi-durables such as clothing, and durables such as refrigerators.

Contagion

Disease transmission by direct or indirect contact.A disease that is or may be transmitted by direct or indirect contact; a contagious disease.The direct cause, such as a bacterium or virus, of a communicable disease.

Contract

In general: legal agreement between two or more parties, such as that between an advertising agency and its clients, that describes the services to be performed and the price and payment terms.

Contract Expiration Date

The date on which a currency must be delivered to fulfill the terms of the contract.

Contract Month

The month during which a futures contract expires, and during which delivery may take place according to the terms of the contract. also called contract month. also called delivery month.

convenience store

A small retail store that is open long hours and that typically sells staple groceries, snacks, and sometimes.

Convenience Store Sales

A small retail store that is open long hours and that typically sells staple groceries, snacks, and sometimes gasoline.

Convergence

The degree to which the price in a futures or forward market moves toward, or converges, with prices in the cash market as the expiration date approaches. Generally, if convergence is reached at expiration, then that market is likely to be more liquid and easily traded. A trader can be fairly certain that a stock index contract closely matches the cash settlement value of the actual stocks, so it serves as a good hedge. If convergence is less definite, then the pricing relationships between the futures contract and the cash product are less defined and may pose problems for traders or arbitrageurs who want to use the financial instruments to hedge their risk.

Conversion

The exchange of a convertible type of asset into another type of asset, usually at a predetermined price, on or before a predetermined date. The conversion feature is a financial derivative instrument that is valued separately from the underlying security. Therefore, an embedded conversion feature adds to the overall value of the security.

Convertible currency

A currency for which there are no barriers or restrictions in the foreign exchange market.

Copey

Slang for the Danish krone.

Corporation

A legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that an individual possesses; that is, a corporation has the right to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes.

Correction

A reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index. Corrections are generally temporary price declines, interrupting an uptrend in the market or asset.

Correlation

In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used in advanced portfolio management.

correspondent

The name given to a bank, broker, dealer, or financial institution that acts on behalf of another financial institution with limited or restricted access to the financial markets where a transaction must occur.

Correspondent Bank

A correspondent account is an account (often called a nostro or vostro account) established by a domestic banking institution to receive deposits from, make payments on behalf of, or handle other financial transactions for a foreign financial institution. This allows foreign banks to conduct business and provide services to their clients without the expense of a physical presence.

"Correspondent banking is also known as a relationship entered into between a small bank and a big bank in which the big bank provides a number of deposit, lending, and other services.

Cost of Carry

Costs incurred as a result of an investment position. These costs can include financial costs, such as the interest costs on bonds, interest expenses on margin accounts and interest on loans used to purchase a security, and economic costs, such as the opportunity costs associated with taking the initial position.

Cost of Living Index

An indicator of the current price level for goods and services related to some base year.

Counter Currency

In foreign exchange markets, the quote currency is the second currency in a currency pair.The quote currency is also known as the counter currency.If looking at the EUR/USD currency pair, the U.S. Dollar is the quote currency, and the Euro is the base currency. This money or currency-related article is a stub. You can help Wikipedia by expanding it.

Counterpart

Counterpart International finds perfect partners to work together in improving the quality of life for communities worldwide. The not-for-profit humanitarian relief organization provides food, medical supplies, disaster relief, technical and economic assistance, and training to countries in the former Soviet Union, Central Asian republics, Southeast Asia, Eastern Europe, and Africa. It helps form coalitions of companies, governments, and grass roots organizations to build schools and hospitals, foster micro-businesses, and develop tourism in war torn or disaster affected areas. Counterpart was founded in 1965 as the Foundation for the Peoples of the South Pacific.

Counterparty

The other party that participates in a financial transaction. Every transaction must have a counterparty in order for the transaction to go through. More specifically, every buyer of an asset must be paired up with a seller that is willing to sell and vice versa.

Counterparty Risks

The risk to each party of a contract that the counterparty will not live up to its contractual obligations.

Countervalue

Countervalue refers to the targeting of an opponent's cities and civilian populations. In contrast, counterforce refers to the targeting of an opponent's military personnel, forces and facilities.

Country Risk

When a country defaults it can harm the performance of all other financial instruments in that country, as well as other countries.

Coupon Value

The rate of return anticipated on a bond if it is held until the maturity date. YTM is considered a long-term bond yield expressed as an annual rate. The calculation of YTM takes into account the current market price, par value, coupon interest rate and time to maturity. It is also assumed that all coupons are reinvested at the same rate. Sometimes this is simply referred to as "yield" for short.

Cover

Cover is a general term used in many different instances. For instance, an investors that recently puchased a security will have to cover the puchase by depositing the necessary funds. Or, an investor may wish to cover his/her short position by purchasing the stock. Or, a portfolio manager may wish to cover his/her risk exposure by buying an offsetting position.

CPI

CPI is seen by many as the most important measure of inflation. The Consumer Price Index measures the price level of a fixed basket of goods and services purchased at a consumer level.

Crawling peg

Crawling peg is an exchange rate regime usually seen as a part of fixed exchange rate regimes which allows depreciation or appreciation in an exchange rate gradually. Some central banks use a formula which triggers a change when certain conditions are met (like need for adjustment for inflation), while others prefer not to use a preset formula and change exchange rate frequently to discourage speculations.

Credit Card

A card allowing someone to make a purchase on borrowed money. Credit cards are one of the most popular forms of payment for consumer goods and services in the United States.

Credit Checking

The process of evaluating an applicant's loan request or a corporation's debt issue in order to determine the likelihood that the borrower will live up to his/her obligations. also called credit analysis.

credit line

An arrangement in which a bank or vendor extends a specified amount of unsecured credit to a specified borrower for a specified time period. also called line of credit.

Credit Risk

The possibility that a bond issuer will default, by failing to repay principal and interest in a timely manner. Bonds issued by the federal government, for the most part, are immune from default (if the government needs money it can just print more). Bonds issued by corporations are more likely to be defaulted on, since companies often go bankrupt. Municipalities occasionally default as well, although it is much less common. also called default risk.

Cross Currency Pairs

The quotation and pricing structure of the currencies traded in the forex market: the value of a currency is determined by its comparison to another currency. The first currency of a currency pair is called the "base currency", and the second currency is called the "quote currency". The currency pair shows how much of the quote currency is needed to purchase one unit of the base currency.

Cross Deal

You are going to lose money if you invest in stocks. Sooner or later, it’s bound to happen. If fact, it may have happened already and you don’t recognize it because losses can take several different forms.

Cross Rate

The exchange rate between two currencies that are not the official currencies of the country that the exchange was quoted in. Cross rates usually do not involve the U.S. dollar. For example, an investor in the United States could get the cross rate of the Euro to the Canadian Dollar.

Cross rates

Rates between two currencies, neither of which is the US Dollar.

Cross-Rate

The currency exchange rate between two currencies

Cross-Trade

A practice in which a broker offsets buy and sell orders without recording the transactions on the exchange. This is illegal, because it may prevent an investor from getting the best possible price on the trade.

Crossover

The point on a stock chart when a security and an indicator intersect. Crossovers are used by technical analysts to aid in forecasting the future movements in the price of a stock. In most technical analysis models, a crossover is a signal to either buy or sell.

Cup with Handle

The cup and handle is a unique bullish continuation pattern. It starts after a stock stages a lengthy rally. The stock then pulls back and starts to level off. The stock then rallies back up to the point at which the previous run ended. The stock reverses once more from the same level, creating horizontal resistance. The stock levels off after pulling back, attracting buyers, but this time at a relatively higher price. It returns to the horizontal resistance once more and breaks out, continuing its bullish trend.

Currency

A generally accepted form of money, including coins and paper notes, which is issued by a government and circulated within an economy. Used as a medium of exchange for goods and services, currency is the basis for trade.

Currency Basket

A currency basket is commonly used in contracts as a way of avoiding (or minimizing) the risk of currency fluctuations. The European Currency Unit (which was replaced by the euro) and the Asian Currency Unit are examples of currency baskets.

Currency Option

A contract that grants the holder the right, but not the obligation, to buy or sell currency at a specified exchange rate during a specified period of time. For this right, a premium is paid to the broker, which will vary depending on the number of contracts purchased. Currency options are one of the best ways for corporations or individuals to hedge against adverse movements in exchange rates.

Currency Pair

The quotation and pricing structure of the currencies traded in the forex market: the value of a currency is determined by its comparison to another currency. The first currency of a currency pair is called the "base currency", and the second currency is called the "quote currency". The currency pair shows how much of the quote currency is needed to purchase one unit of the base currency

Currency Risk

A form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

Currency symbols

A currency sign is a graphic symbol often used as a shorthand for a currency's name. Internationally, ISO 4217 codes are used instead of currency signs, though currency signs may be in common use in their respective countries. Most currencies in the world have no specific symbol

Current Account

The difference between a nation's total exports of goods, services and transfers, and its total imports of them. Current account balance calculations exclude transactions in financial assets and liabilities.

Current Balance

An apparatus with which force is measured between current-carrying conductors, with the purpose of assigning the value of the ampere. Also known as ampere balance.

Cycle

Interval or unit of time specified within a contract, when the contract is for a longer time period. For example, an advertiser may have a television broadcast media purchase contract for a period of one year. Within that year contract, there may be specified four 13-week periods of television programming. Each 13-week period is considered a cycle. The advertiser may change or cancel the contract (with proper notice, of course) at the end of a cycle.

LETTER-D

Daily Trading Limit

Maximum that many commodities and options are allowed to rise or fall in one day. When a market reaches its limit early and stays there all day, it is said to be having an up-limit or down-limit day.

Day Order

A day order will not be executed if the limit or stop order prices were not met during the day. A way to increase the life of an order is to order securities on a 'good 'till cancelled' basis, where, as the name implies, the trade will not expire until it is cancelled or until it reaches a maximum time limit set by the brokerage.

Day Trader

A day order will not be executed if the limit or stop order prices were not met during the day. A way to increase the life of an order is to order securities on a 'good 'till cancelled' basis, where, as the name implies, the trade will not expire until it is cancelled or until it reaches a maximum time limit set by the brokerage.

Day Trading

A stock trader who holds positions for a very short time (from minutes to hours) and makes numerous trades each day. Most trades are entered and closed out within the same day.

DCLG

The Department for Communities and Local Government[1] (CLG) is the UK Government department for communities and local government in England, since May 2006.[1] The department originated in 2001 as the Office of the Deputy

Deal Date

The date on which a transaction is agreed upon.

Deal Ticket

The primary method of recording the basic information relating to a transaction.

Deal Ticket/Deal Slip

The primary method of recording the basic information relating to a transaction.

Dealer

An individual or entity, such as a securities firm, when it acts as a principal and stands ready to buy and sell for its own account. More generally, an individual or entity which buys and sells products and holds an inventory.

Debt

An amount borrowed or owed between two parties. Debt comes with the implied (or explicitly stated) promise to repay, a repayment schedule and interest arrangements on outstanding debt.

Debt may be reflected in the form of a contract, bond, mortgage or other form stating terms of repayment, maturity date and interest arrangements An amount owed to a person or organization for funds borrowed. Debt can be represented by a loan note, bond, mortgage or other form stating repayment terms and, if applicable, interest requirements. These different forms all imply intent to pay back an amount owed by a specific date, which is set forth in the repayment terms.

Declaration Date

The latest day or time by which the buyer of an option must intimate to the seller his willingness or unwillingness to exercise the option.

Default

Failure by the bond issuer to pay the interest or principal, when due.

Deficit

A negative balance of trade or payments.

Deflator

A statistical tool that converts current dollars into inflation-adjusted dollars, in order to compare prices over time after factoring out the overall effects of inflation.

Delivery

An FX trade where both sides make and take actual delivery of the currencies traded.

Delivery Date

The date of maturity of the contract, when the final settlement of transaction is made by exchanging the currencies. This date is more commonly known as the value date.

Delivery Month

The calendar month in which a futures contract comes to maturity and becomes deliverable.

Delivery Points

A location or facility designated by a futures exchange for tendering and accepting goods deliverable according to the terms of a futures contract.

Delivery Risk

A term to describe when a counterparty will not be able to complete his side of the deal. This risk is very high in case of over the counter transactions where there is no exchange which can stand as a guarantee to the trade between the two parties to the contract.

Delta

1.The change in price of a call option for every one-point move in the price of the underlying security. also called hedge ratio.

2.The ratio of the change in price of an option to the change in price of the underlying asset. Also called the hedge ratio. Applies to derivative products. For a call option on a stock, a delta of 0.50 means that for every $1.00 that the stock goes up, the option price rises by $0.50. As options near expiration, in-the-money call option contracts approach a delta of 1.0, while in-the-money put options approach a delta of -1. See: hedge ratio, neutral hedge. Call deltas range from 0.00 to +1.00; put deltas range from 0.00 to -1.00. If the call delta is 0.69, the put delta is -0.31 (call delta minus 1 equals put delta; 0.69 -1 =-0.31).

Department for Communities and Local Government

Department for Communities and Local Government (UK Government department, successor to ODPM)

Depo

Deposit
The initial outlay required of a client by a futures position to open a futures position, returnable upon liquidation of that position.

Depository Institution

A depository institution is a financial institution in United States, such as a savings bank, that is legally allowed to accept monetary deposits from consumers. Federal depository institutions are regulated by the Federal Deposit Insurance Corporation (FDIC). An example of a non-depository institution might be a mortgage bank. While licensed to lend, they cannot accept deposits.

Depreciation

A fall in the value of a currency due to market forces.

Derivative

A contract that changes in value in relation to the price movements of a related or underlying security, future or other physical instrument. An Option is the most common derivative instrument.

Derivatives

A broad term relating to risk management instruments such as futures, options, swaps, etc.. The contract value moves in relation to the underlying instrument or currency.

Desk

Term referring to a group dealing with a specific currency or currencies.

Details

All the information required to finalize a foreign exchange transaction, i.e. name, rate, dates, and point of delivery.

Devaluation

The act by a government to reduce the external value of its currency.

DEWR

Department of Employment and Workplace Relations (Australia)

DEWR Skilled Vacancies - Australia

Measures the monthly change in skilled job vacancies across Australia . Expressed as an index, the Skilled Vacancies Index is a leading indicator for the Australian Labor market. A high number of vacancies indicate a job market where labor is in demand and employers are pressured to increase wages. Rising wages put upward pressure on inflation than can lead to interest rate changes. On the other hand fewer skilled vacancies imply a tighter job market where skilled workers face greater difficulty finding employment, possibly weighing wages down.

DIBOR

Dublin Inter-bank Offered Rate.

Direct Quote

Representation of cost of unit of a foreign currency in terms of national currency.

Dirty Float

An exchange rate system in which the currency is not pegged, but is "managed" by the central bank to prevent extreme fluctuations in the exchange rate. The exchange rate is managed through changes in the interest rate to attract/detract capital flows or through the buying and selling of the currency. This system is contrasted with a Pure Float in which there is no central bank intervention and the exchange rate is entirely determined by the market and speculation. Also known as "Managed Float."

Discount

Less than the spot price example: forward discount.

Discount House

An institution that purchases promisory notes and resells them or holds them until maturity.

Discount Rate

The rate at which member banks may borrow short term funds directly from a Federal Reserve Bank. The discount rate is one of the two interest rates set by the Fed, the other being the Federal funds rate. The Fed actually controls this rate directly, but this fact does not really help in policy implementation, since banks can also find such funds elsewhere. also called Federal Reserve Discount Rate.

Discretionary Account

An account in which the customer permits a trading institution to act on the customer's behalf in buying and selling currency pairs. The institution has discretion as to the choice of currency pairs, prices, and timing-subject to any limitations specified in the agreement.

Distributive Trade

Distribution of material goods to consumers, through retailing and wholesaling

Dividend

That part of the earnings of a corporation that is distributed to its shareholders; usually paid quarterly

Domestic CGPI -Domestic Corporate Goods Price Index- Japan

The Domestic Corporate Goods Price Index measures prices for goods purchased by Japanese corporations. As prices for input materials and the overall cost of manufacturing change, companies adjust retail prices accordingly. The CGPI comprehensively tracks these supply-side price pressures and increases in the index often precede upward movement in the CPI. If an increase in the CGPI is followed by a rise in the CPI, concerns about inflation may prompt the Bank of Japan to raise interest rates. The headline numbers are the percentage change in the index month or month and annually.

Note : The index's base year is the year 2000 and the base value is 100. Thus, an index value of 105 signifies a 5% increase in prices since the year 2000. The data report also contains individual indexes for each commodity category used in the Wholesale Price Index.

Domestic corporate Goods Price Index_Domestic CGPI - Japan

The Domestic Corporate Goods Price Index measures prices for goods purchased by Japanese corporations. As prices for input materials and the overall cost of manufacturing change, companies adjust retail prices accordingly. The CGPI comprehensively tracks these supply-side price pressures and increases in the index often precede upward movement in the CPI. If an increase in the CGPI is followed by a rise in the CPI, concerns about inflation may prompt the Bank of Japan to raise interest rates. The headline numbers are the percentage change in the index month or month and annually.

Domestic Demand

Measure of the amount of goods and services sought by German consumers. This sort of consumption is the largest component of GDP and key to German economic growth. Given that Germany is the largest country in the Euro-zone; its economic activity will be reflected in Euro-zone figures and watched by the European Central Bank. Though Germany is traditionally an export driven economy, the strength of domestic demand can determine whether economic slowdown or growth is in the future.

Double

An option either to buy or sell an instrument or currency at a specified price. The exercise of the right to sell causes the right to buy to expire and vice versa.

Durable Goods Order

An economic indicator which measures the changes in sales of products with a life span in excess of three years.

Dwelling Starts - Australia

The number of construction starts on new homes in the past month. The figure, officially called Construction of Dwellings, measures growth in the construction sector and reflects the overall health of the housing market. Increased spending on expensive items like new homes reflects consumer optimism towards the economy. The headline number is the percentage change in Dwelling Starts from the previous month's figure.

LETTER-E

Easing

Modest decline in price.

ECB--European Central Bank

The Central Bank for the new European Monetary Union.

Echo Watchers Survey

The Economy Watchers Survey asks business-cycle sensitive workers their thoughts on existing and future economic conditions, giving a detailed picture of economic trends in Japan . The survey is based on questionnaires from 'man on the street' sectors that are particularly vulnerable to business cycle turns. These segments of the economy include sectors such as retail, restaurant service, and taxi driving. With this combined data the Japanese Eco Watchers report serves as both a consumer confidence indicator and a leading indicator for the rest of the economy. The report is usually released less than two weeks after the reporting month, thus its statistics are usually very timely. The headline number is released where 50 represents the center midpoint line of boom/bust sentiment.

Economic Exposure

The risk on a company's cash flow arising from foreign exchange fluctuations

Economic and Monetary Union - EMU

An economic and monetary union is a single market with a common currency. It is to be distinguished from a mere currency union (e.g. the Latin Monetary Union in the 1800s), which does not involve a single market.

The largest economic and monetary union at present is the Eurozone. The Eurozone consists of the European Union member states that have completed the third stage of the EMU by adopting the Euro. Some non-EU members have also adopted the Euro, but they are not part of this EMU

Economic Exposure

Reflects the impact of foreign exchange changes on the future competitive position of a company in the sense of the impact it can have on the future cash flows of the company. An exposure to fluctuating exchange rates, which affects a company's earnings, cash flow and foreign investments. The extent to which a company is affected by economic exposure depends on the specific characteristics of the company and its industry.

Is an economy on a high growth rate trajectory placing pressure on the production capacity resulting in increased inflationary pressures and higher interest rates.

ECP-Eurocommercial Paper

An unsecured, short-term loan issued by a bank or corporation in the international money market, denominated in a currency that differs from the corporation's domestic currency.

For example, if a U.S. corporation issues a short-term bond denominated in Canadian dollars to finance its inventory through the international money market, it has issued eurocommercial paper.

ECU

European Currency Unit.
ECU. A composite monetary unit consisting of a basket of European Community currencies that served as the predecessor to the Euro.

ECU - European Currency Unit

A basket of the member currencies. As a composite unit, the ECU consists of all the European Community currencies, which are individually weighted. It was created by the European Monetary System with the eventual goal of replacing the individual European member currencies.

EDI

Electronic Data Interchange.
(Electronic Data Interchange) The electronic communication of business transactions, such as orders, confirmations and invoices, between organizations. Third parties provide EDI services that enable organizations with different equipment to connect. Although interactive access may be a part of it, EDI implies direct computer-to-computer transactions into vendors' databases and ordering systems.

Efficient Market Theory

The theory that the current market price reflects all information and expectations regarding the currency pair in question. The theory also assumes that the market cannot overprice or underprice an asset, and hence the current price is the correct valuation at the time.

Efficient Markets

Markets where assets are traded in which the price is indicative of all current and relevant information and thus it is impossible to have undervalued assets.

The Energy Information Administration (EIA) provides weekly information on natural gas stocks in underground storage for the U.S., and three regions of the country. The level of inventories help determine prices for natural gas products.

EIA-Energy Information Administration

Energy Information Administration
The Energy Information Administration (EIA), as part of the U.S. Department of Energy, collects and disseminates data on energy reserves, production, consumption, distribution, prices, technology, and related international, economic, and financial matters. Coverage of EIA's programs includes data on coal, petroleum, natural gas, electric, and nuclear energy.

Elliot Wave Theory

A theory based on the notion that the market moves in waves, which consist of trends followed by partial corrections. The Elliot Wave Theory states that there are 5 waves within an overall trend.

Empire State Manufacturing Survey - United States

The New York Fed conducts this monthly survey of manufacturers in New York State. Participants from across the state represent a variety of industries. On the first of each month, the same pool of roughly 175 manufacturing executives (usually the CEO or the president) is sent a questionnaire to report the change in an assortment of indicators from the previous month. Respondents also give their views about the likely direction of these same indicators six months ahead. This index is seasonally adjusted using the Philadelphia Fed's seasonal factors because its own history is not long enough with data only going back a couple of years. (Federal Reserve Bank of New York)

employment cost index

A closely watched economic report by the Bureau of Labor Statistics that indicates the total cost of employing a civilian worker. A larger-than-expected increase in the index is likely to place downward pressure on both bond and equity prices.

Employment Level - Switzerland

The number of paid employees working at least six hours each week. The headline number for the employment level, which is officially known as "workforce jobs," appears as both the total number of employees and as a year on year percentage change in that figure. The Swiss employment level is important serving as the headline figure for job growth or decline. Higher job growth accompanies economic expansion and could spark inflationary pressures. Swiss unemployment has historically been very low, averaging half that of the EU. Whereas most countries consider an unemployment rate of 4% very low, Switzerland is accustomed to rates below 4%. Relevance : Rarely affects markets

EMS

European Monetary System

A system designed to stabilize if not eliminate exchange risk between member states of the EMS as part of the economic convergence policy of the EU. It permits currencies to move in a measured fashion (divergence indicator) within agreed bands (the parity grid) with respect to the ECU and consequently with each other.

EMU

European Monetary Union

EMU (Economic and Monetary Union)

Economic and Monetary Union

End Of Day Order - EOD

An order to buy or sell at a specified price. This order remains open until the end of the trading day which is typically 5PM ET.

Entrepot

A term used for international trade where goods are shipped to a centre for re-export. Hong Kong engages in significant amounts of this form of trade.

Envelopes

While Bollinger Bands place boundary lines based on standard deviation, envelopes place lines at fixed percentage points above and below a moving average line. The upper and lower limits specify entry and exit points for currency traders.

EOD - End Of Day Order

An order to buy or sell at a specified price. This order remains open until the end of the trading day which is typically 5PM ET.

EOE

European Options Exchange.

Equilibrium

A price region that suggests a balance between demand and supply for an currency pair in the marketplace.

Equipment Investment - Germany - Euro-zone

Measures the total value of German investments in equipment including machinery and construction equipment. Equipment Investment is a part of GDP and released at the same time, therefore changes in the figure directly change overall GDP. But Equipment Investment is also an early indicator for production since companies generally make capital expenditures in a healthy economy when the need to expand operational productivity exists. Because such capital expenditures are sensitive to business conditions, the report can also forecast economic growth or recession. The headline number is the percentage change in Equipment Investment in the reporting quarter.

equity market

The market in which shares are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies access to capital and investors a slice of ownership in a company with the potential to realize gains based on its future performance.

This market can be split into two main sectors: the primary and secondary market. The primary market is where new issues are first offered. Any subsequent trading takes place in the secondary market.

ERM

Exchange Rate Mechanism.

Euro

The common currency adopted by eleven European nations(Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Italy, Spain and Portugal) on January 1, 1999.

Eurobond

A long-term loan issued in a currency other than that of the country or market in which it is issued. Interest is paid without the deduction of tax.

Euroclear

One of the leading clearing systems for eurobonds.

Eurodollar

US currency or funds held in banks outside the US—in Europe or anywhere else. Eurodollars are used commonly for settling international transactions.

European Monetary Union

An institution of the EU, whose primary goal is to establish a single currency (the euro) for the entire EU.

European Monetary Union - EMU

The principal goal of the EMU is to establish a single European currency called the Euro, which will officially replace the national currencies of the member EU countries in 2002. On Janaury1, 1999 the transitional phase to introduce the Euro began. The Euro now exists as a banking currency and paper financial transactions and foreign exchange are made in Euros. This transition period will last for three years, at which time Euro notes an coins will enter circulation. On July 1,2002, only Euros will be legal tender for EMU participants, the national currencies of the member countries will cease to exist. The current members of the EMU are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Italy, Spain and Portugal.

European Union

The group formerly known as the European Community.

Exchange Rate Risk

The risk that a business' operations or an investment's value will be affected by changes in exchange rates. For example, if money must be converted into a different currency to make a certain investment, changes in the value of the currency relative to the American dollar will affect the total loss or gain on the investment when the money is converted back. This risk usually affects businesses, but it can also affect individual investors who make international investments.

Exchange control

Rules used to preserve or protect the value of a country's currency.

Exchange Rate Risk

The potential loss that could be incurred from an adverse movement in exchange rates.

Execution

The Process of completing an order or deal.

exercise

When an option or warrant holder takes up his or her option to buy or sell the underlying instrument (for example shares, commodities, an index etc) he/she is said to exercise the option or warrant.

Exercise (options)

The owner of an option contract may exercise it, indicating that the financial transaction specified by the contract is to be enacted immediately between the two parties, and the contract itself is terminated. When exercising a call, the owner of the option purchases the underlier at the strike price from the option seller, while for a put, the owner of the option sells the underlier to the option seller.

Exercise Notice

A formal notification that the holder of an option wishes to exercise it by buying or selling the underlying stock at the exercise price.

Exercise Price - Strike Price

The price at which an option can be exercised.

Exotic

A foreign exchange term for a thinly traded currency. Exotic currencies are illiquid, lack market depth and trade at low volumes. Trading an exotic currency can be expensive, as the bid-ask spread is usually large.

Exotics are not considered major currencies because they are not easily traded in a standard brokerage account. Major currencies include the U.S. dollar, eurodollar, Canadian dollar and Swiss franc. Examples of exotic currencies include the Thai baht, Uruguay peso or Iraqi dinari.

Expansion

Growth, as in an economic recovery.

Expiration Date

(1) Options - the last date after which the option can no longer be exercised. (2) Bonds-the date on which a bond matures.

Expiration Month

The month in which an option expires.

Expiry Date

The last day on which the holder of an option can exercise his right to buy or sell the underlying security.

Exponentially Weighted Moving Average - EMA

While the simple moving average distributes weight equally across the data series, exponentially weighted moving averages place greater weight to more recent data. As a result, they tend to provide a faster signal.

Exposure

In foreign exchange, a potential for gain or loss because of movement in foreign exchange rate.

LETTER-F

face value

The value printed on the face of a stock, bond, or other financial instrument or document.

Factory Orders

An economic indicator which refers to the total orders of durable and nondurable goods. The nondurable goods orders consist of food , clothing , light industrial products and products designed for the maintenance of the durable goods.

Fast Market

A financial market experiencing high trading volume and increased volatility.

FDIC=Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation created by the Glass-Steagall Act of 1933. The vast number of bank failures in the Great Depression spurred the United States Congress into creating an institution which would guarantee deposits held by commercial banks, inspired by the Commonwealth of Massachusetts and its Depositors Insurance Fund (DIF). The FDIC provides deposit insurance which currently guarantees checking and savings deposits in member banks up to $100,000 per depositor.

Fed - Federal Reserve

The Central Bank of the United States.

Fed Fund Rate

The interest rate on Fed funds. This is a closely watched short term interest rate as it signals the Feds view as to the state of the money supply.

Fed Funds

Reserve balances that are maintained by commercial banks in the Federal Reserve System at amounts above what is required. These excess reserves are available for lending to other banks in need of reserves. Although the loans are usually made on a single-day basis, they may be renewed. The availability of and the rate paid for federal funds are important indicators of Federal Reserve policy; hence, both are watched closely by financial analysts in order to forecast changes in the credit markets. Also called fed funds.

FEDAI

Foreign Exchange Dealers Association of India) is an association of all dealers in foreign exchange which sets the ground rules for fixation of commissions and other charges and also determines the rules and regulation relating to day-to-day transactions in foreign exchange in India. The FEDAI has commonly recognised 38 currencies for dealing.

Federal Deposit Insurance Corporation - FDIC

The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation created by the Glass-Steagall Act of 1933. The vast number of bank failures in the Great Depression spurred the United States Congress into creating an institution which would guarantee deposits held by commercial banks, inspired by the Commonwealth of Massachusetts and its Depositors Insurance Fund (DIF). The FDIC provides deposit insurance which currently guarantees checking and savings deposits in member banks up to $100,000 per depositor.

Federal National Mortgage Association-Fannie Mae

The Federal National Mortgage Association (FNMA) (NYSE: FNM), commonly known as Fannie Mae, is a government sponsored enterprise (GSE) sponsored by the United States government. As a GSE, it is a privately-owned corporation authorized to make loans and loan guarantees. It is not backed or funded by the U.S. government, nor do the securities it issues benefit from any explicit government guarantee or protection. This secondary mortgage market helps to replenish the supply of lendable money for mortgages and ensures that money continues to be available for new home purchases. The name "Fannie Mae" is a creative acronym-portmanteau of the company's full name that has been adopted officially for ease of identification.

Federal Open Market Committee

Abbreviation for Federal Open Market Committee. A 12-member committee which sets credit and interest rate policies for the Federal Reserve System. This committee consists of 7 members of the Board of Governors, and 5 of the 12 Federal Reserve Bank Presidents. This group, headed by the Chairman of the Federal Reserve Board, sets interest rates either directly (by changing the discount rate) or through the use of open market operations (by purchasing and selling government securities which affects the federal funds rate).

Federal Open Market Committee=FOMC

A 12-member committee which sets credit and interest rate policies for the Federal Reserve System. This committee consists of 7 members of the Board of Governors, and 5 of the 12 Federal Reserve Bank Presidents. This group, headed by the Chairman of the Federal Reserve Board, sets interest rates either directly (by changing the discount rate) or through the use of open market operations (by purchasing and selling government securities which affects the federal funds rate).

Federal Reserve - Fed

The Central Bank of the United States.

Federal Reserve Board

The board of the Federal Reserve System, appointed by the US President for 14 year terms, one of whom is appointed for four years as chairman.

Federal Reserve System

The central banking system of the US comprising 12 Federal Reserve Banks controlling 12 districts under the Federal Reserve Board. Membership of the Fed is compulsory for banks chartered by the Comptroller of Currency and optional for state chartered banks.

Fedwire

An automated communications and settlement system linking the Federal Reserve banks with other banks and with depository institutions.

Fill

The process of completing a customer's order to buy or sell a currency pair.
Execute an order or buy or sell a security or commodity.

Fill or Kill

An order given to a broker that must immediately be filled in its entirety or, if this is not possible, totally canceled.

Fill Price

The price at which a buy or sell order was executed.

Final Goods

In economics final goods are goods that are ultimately consumed rather than used in the production of another good. For example, a car sold to a consumer is a final good; the components such as tires sold to the car manufacturer are not; they are intermediate goods used to make the final good.

Finance

To raise money through the issuance and sale of debt and/or equity.

Financial Asset

A non-physical asset, such as a security, certificate, or bank balance

Financial Risk

The possibility that a bond issuer will default, by failing to repay principal and interest in a timely manner. Bonds issued by the federal government, for the most part, are immune from default (if the government needs money it can just print more). Bonds issued by corporations are more likely to be defaulted on, since companies often go bankrupt. Municipalities occasionally default as well, although it is much less common. also called default risk or credit risk.

Finantial Institution

Institution which collects funds from the public and places them in financial assets, such as deposits, loans, and bonds, rather than tangible property.

Finex

A futures and options exchange for the trading of financial contracts on currencies and U.S. Treasury securities. The FINEX, with trading floors in New York City and Dublin, Ireland, is a division of the New York Board of Trade.

Fiscal Policy

Decisions by the President and Congress, usually relating to taxation and government spending, with the goals of full employment, price stability, and economic growth. By changing tax laws, the government can effectively modify the amount of disposable income available to its taxpayers. For example, if taxes were to increase, consumers would have less disposable income and in turn would have less money to spend on goods and services. This difference in disposable income would go to the government instead of going to consumers, who would pass the money onto companies. Or, the government could choose to increase government spending by directly purchasing goods and services from private companies. This would increase the flow of money through the economy and would eventually increase the disposable income available to consumers. Unfortunately, this process takes time, as the money needs to wind its way through the economy, creating a significant lag between the implementation of fiscal policy and its effect on the economy.

Fisher Effect

The direct relationship between inflation and interest rates. Increasing inflationary expectations result in increasing interest rates.

Fixed Interest Security

A fixed interest security is a debt security. When you buy or subscribe for a fixed interest security, you are in effect lending money to an entity, known as the ‘issuer’. In return for the loan you provide, the issuer will pay you a specified rate of interest (a coupon) during the lifetime of the fixed interest security, and will repay the face value of the fixed interest security (the principal) to you at a predefined time (maturity date).

Fixed Exchange Rate

Official rate set by monetary authorities for one or more currencies. In practice, even fixed exchange rates are allowed to fluctuate between definite upper and lower bands, leading to intervention by the central bank.

Flat/square

Dealer jargon used to describe a position that has been completely reversed, e.g. you bought $500,000 then sold $500,000, thereby creating a neutral (flat) position.

Floating Exchange Rate

When the value of a currency is decided by the market forces dictating the demand and supply of that particular currency.

Floor

The place on an exchange where trading occurs.

FOMC

Abbreviation for Federal Open Market Committee. A 12-member committee which sets credit and interest rate policies for the Federal Reserve System. This committee consists of 7 members of the Board of Governors, and 5 of the 12 Federal Reserve Bank Presidents. This group, headed by the Chairman of the Federal Reserve Board, sets interest rates either directly (by changing the discount rate) or through the use of open market operations (by purchasing and selling government securities which affects the federal funds rate).

FOMC Meeting Announcement

The Federal Open Market Committee consists of the seven Governors of the Federal Reserve Board and five Federal Reserve Bank presidents. The FOMC meets eight times a year in order to determine the near-term direction of monetary policy. Changes in monetary policy are now announced immediately after FOMC meetings.

foreclose

To deprive (a mortgagor) of the right to redeem mortgaged property, as when payments have not been made.

foreclosure

Legal process by which a lender cancels (forecloses) a borrower's right of redemption of the mortgaged property through a court order (called foreclosure order). The court sets a date up to which the borrower can redeem the property by paying off the entire loan balance (including foreclosing expenses). Thereafter, the lender is free to sell the property and, upon the sale, applies the sale proceeds first to the due amount and pays the remainder (if any) to the borrower. The borrower remains liable for the due amount if the property remains unsold, and for the shortfall if the sale proceeds are insufficient to pay off the entire debt. The lender is generally under an obligation to sell the property at or near its fair market value (FMV).

Foreign Currency Effect

Refers to how changes in the exchange rate affect the return on foreign investment

Foreign direct investment - FDI

Foreign direct investment (FDI) is defined as "investment made to acquire lasting interest in enterprises operating outside of the economy of the investor

Foreign Exchange

(FX) - the simultaneous buying of one currency and selling of another.

Foreign Exchange Centers

London is the largest centre of foreign exchange trading. New York, Tokyo, Singapore, Zurich and Hong Kong are also important.

Foreign Exchange Market
Market where currencies are traded internationally. About a trillion (million million) dollars-worth of foreign exchange is traded globally every day, making forex larger than all bond markets put together. Currency markets exist in the form of spot, forward, futures and options markets. Foreign exchange transactions are made up of: Trade flows Only 5% to 10% of total forex transactions. Imports usually need to be paid for in the currency of the country from which they originate. Exports are usually paid for in one's own currency. A trade deficit therefore causes a currency to depreciate. Flow-ons Created when a large trade is split up into several smaller trades. Capital flows Cross-border investment. Speculation Short-term investment based on expected currency movements. This accounts for the lion's share of forex market volume.

Foreign Position

It means a position under which one party hereto agrees to purchase from or sell to the other party hereto an agreed amount of foreign currency.

Forward

A contract obligating one party to buy and another other party to sell a financial instrument, equity, commodity or currency at a specific future date.

Forward Contract

A contract between two counterparties where one person agrees to buy from the other person, who of course agrees to sell, a certain quantity of a financial instrument or commodity at a pre determined price but for delivery at an agreed future date.

Forward Cover Taking

forward contracts to protect against movements in the exchange rate.

Forward Deal

A deal with a value date greater than the spot value date.

A transaction consisting of a purchase or sale (often of foreign currency) with settlement to occur at a specified future date. Such a transaction will state the specific amount of the asset to be delivered at the specific time, as well as the unit price at which it will be delivered.

Forward margins

Discounts or premiums between spot rate and the forward rate for a currency. Normally quoted in points.

Forward Operations

Forex transactions, on which the fulfillment of the mutual delivery obligations is made on a date later than the second business day after the transaction was concluded.

Forward Outright

A commitment to buy or sell a currency for delivery on a specified future date or period. The price is quoted as the Spot rate minus or plus the forward points for the chosen period.

Forward Points

The points that are added to or subtracted from the spot rate to calculate the forward rates for a forward foreign exchange transaction. These points are based on the differential between the interest rates of the two currency pairs.

Forward Price

The net price resulting from calculating the forward points and subtracting them from the existing spot rate. This is the rate at which a currency can be purchased or sold for delivery in the future.

Forward Rate

The rate at which a foreign exchange contract is struck today for settlement at a specified future date which is decided at the time of entering into the contract. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction. The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market. Therefor the forward points are subtracted from the spot rate. Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate.

Forward Rates

The net price resulting from calculating the forward points and subtracting them from the existing spot rate. This is the rate at which a currency can be purchased or sold for delivery in the future.

Free Reserves

Funds available to banks for lending or investment, widely regarded as an indicator of available Bank Credit. Excess reserves are the amount remaining after required reserves are subtracted from reserve balances deposited with a Federal Reserve Bank. The total of free reserves is computed by subtracting from a bank's Excess Reserves (or reserve account balances above its reserve requirements) any borrowings from the Federal Reserve.

Front Office

1.In Business, front office refers to Sales and Marketing divisions of a company. It may also refer to other divisions in a company that involves interactions with customers.

Analysis of economic and political information with the objective of determining future movements in a financial market.

Fundamentals

The macro economic factors that are accepted as forming the foundation for the relative value of a currency, these include inflation, growth, trade balance, government deficit, and interest rates.

Futures

A way of trading financial instruments, currencies or commodities for a specific price on a specific date in the future. Unlike options, futures give the obligation (not the option) to buy or sell instruments at a later date. They can be used to both protect and to speculate against the future value of the underlying product.

A contract to buy or sell a specified amount of a commodity or financial instrument at an agreed price at a set date in the future. If the price for the commodity or financial instrument rises between the contract date and the future date, the investor will make money; if it declines, the investor will lose money. The term also refers to the market for such contracts.

The primary difference between a Future and a Forward is that Futures are typically traded over an exchange (Exchange- Traded Contacts - ETC), versus forwards, which are considered Over The Counter (OTC) contracts. An OTC is any contract NOT traded on an exchange.

Futures Exchange-Traded Contracts
They are firm agreements to deliver (or take delivery of) a standardized amount of something on a certain date at a predetermined price. Futures exist in currencies, money market deposits, bonds, shares and commodities. They are traded on an exchange with the clearing corporation gauranteeing the contract and moreover the trade is done on a mark to market basis.

FX

Foreign Exchange.

FY

Fiscal Year

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G10

Eleven industrialized nations that meet on an annual basis to consult each other, debate and cooperate on international financial matters. The member countries are: France, Germany, Belgium, Italy, Japan, the Netherlands, Sweden, the United Kingdom, the United States and Canada, with Switzerland playing a minor role.

G5

The Group of Five. The five leading industrial countries, being US, Germany, Japan, France, UK.

The rate at which a delta changes over time or for one unit change in the price of the underlying asset.

Gap

A mismatch between maturities and cash flows in a bank or individual dealers position book. Gap exposure is effectively interest rate exposure.

GCC=Gulf Cooperation Council

GCC is an association of Persian Gulf nations formed for the purpose of collective defense against aggression.

The Gulf Cooperation Council, or GCC, is made up of Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Oman and Bahrain.

GDP=Gross Domestic Product

Measures the value of goods and services produced with in a country . GDP is the most comprehensive overall measure of economic output and provides key insight as to the driving forces of the economy.

German ZEW Indicator of Economic Sentiment

Experts are asked for a qualitative assessment of the direction of inflation, interest rates, exchange rates and the stock market in the next six months. Thus the indicator provides a medium-term forecast for the German economy.

Gilt-edged Securities

Stocks and shares issued and guaranteed by the British government to raise funds and traded on the Stock Exchange. A relatively risk-free investment, gilts bear fixed interest and are usually redeemable on a specified date. The term is now used generally to describe securities of the highest value.
According to the redemption date, gilts are described as short (up to five years), medium, or long (15 years or more).

Gilts

Risk-free bonds issued by the British government. They are the equivalent of U.S. Treasury securities.

Globex

A system for global after hours electronic trading in futures and options developed by Reuters for CME and CBOT for use in conjunction with various exchanges around the world.

GNP Deflator

Removes inflation from the GNP figure. Usually expressed as a percentage and based on an index figure.

GNP Gap

The difference between the actual real GNP and the potential real GNP. If the gap is negative an economy is overheated.

Going Long

The purchase of a stock, commodity, or currency for investment or speculation.

Going Short

The selling of a currency or instrument not owned by the seller.

Gold Standard

The original system for supporting the value of currency issued. This system was in vogue before 1973 when the fixed exchange rates were prevalent.

Gold Tranche

Part of the country quota for IMF members that had to be paid in gold. This was normally 25% of the quota, the remainder being in domestic currency. The Gold Tranche was automatically available to members without condition. Amount of gold that each member country of the International Monetary fund (IMF) contributes as part of its membership obligations to the fund, and can readily borrow when facing economic difficulties.

Golden Cross

An intersection of two consecutive moving averages which move in the same direction and suggest that the currency will move in the same direction.

Good Till Cancelled Order - GTC

A buy or sell order which remains open until it is filled or canceled.

Government Expenditures - Euro-zone

The value of spending by Euro-zone governments. Euro-zone Government Expenditures is a major component of Euro-zone GDP. However, its release has relatively little market impact since the fiscal policy of Euro-zone governments is usually well-anticipated in advance. Nevertheless, any unexpected change in government expenditures due to unforeseen events can affect to markets

Government Spending

Represents public expenditure by the German government. The government budget on spending is determined by fiscal policy. Thus, it is very predictable and rarely, if ever, moves the market upon release.

grantor

The seller of an option contract

Greenery Day

Greenery Day (April 29): day for commemorating the Emperor Showa's love for nature and many trees he planted on tours throughout the country. (Up to 1988, this day was celebrated as the birthday of the Emperor Showa.)

Gross Domestic Product

Measures the value of goods and services produced with in a country . GDP is the most comprehensive overall measure of economic output and provides key insight as to the driving forces of the economy.

Gross Fixed Capital Formation (GFCF) - Euro-zone

A measure of European investment in capital goods. Fixed capital investments typically increase productivity and GDP growth. When businesses are investing in the big fixed capital items, such as machinery, vehicles, and buildings, it typically reflects optimism for future growth; otherwise, those businesses would other uses for that money. Higher capital investments also tend to increase productivity and contribute to GDP growth. This makes GFCF a measure of business sentiment as well as a leading indicator for economic growth. The headline figure of GFCF is expressed in annualized percentage change for the quarter. Note: GFCF makes up about 20% of the Euro-zone GDP, with Machinery, equipment, vehicles, land-improvements, and buildings being the biggest contributors. Software and artwork are sometimes considered as the intangible fixed assets.

Gross National Product

Gross domestic product plus income earned from investment or work abroad.

GTC - Good 'Til Cancelled Order

An order to buy or sell at a specified price. This order remains open until filled or until the client cancels.

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Hard Currency

A currency, usually from a highly industrialized country, that is widely accepted around the world as a form of payment for goods and services. A hard currency is expected to remain relatively stable through a short period of time, and to be highly liquid in the forex market.

HBOS

Halifax Bank of Scotland

Hedge

A transaction that reduces the risk on an existing investment position.

Hedge Fund

A mutual fund organized as a limited partnership and using high-risk, speculative methods to obtain large profits.

An investment company that uses high-risk techniques, such as borrowing money and selling short, in an effort to make extraordinary capital gains.

Hedge Ratio

The number of futures or options required to hedge a given exposure in the cash market.

Hedged position

One open buy position and one open sell position in the same currency.

Hedging

A hedging transaction is one whose main aim is to protect an asset or liability against a fluctuation in the foreign exchange rate rather than profit from the exchange rate fluctuations.

Help Wanted Index

The help wanted index is a monthly index of the number of lines of help-wanted advertising in 51 major newspapers from around the country. This index indicates strength or weakness in the labor market.

HIA

Housing Industry Association

HICP

Harmonized Index of Consumer Prices
An inflation indicator used by the European Central Bank.
The overall Consumer Price Index data for the twelve European Union member countries is referred to as the Harmonized Price Index (HICP)

high or low- Spike

A significantly lower low or higher high within a data series. Points where an currency spikes often signify a potential reversal in the direction of the trend, and hence can be valuable tools in analyzing a chart.

High/Low

Refers to the daily traded high and low prices of a given currency pair.

Hit the bid

Acceptance of purchasing at the offer or selling at the bid.

Household Consumption - Euro-zone

Euro-zone Household Consumption reports the mean expenditure on individual consumption goods and services per household per year. The figure is reported in the annualized percent change. Increases in Household Consumption are suggestive of increases in economic growth and of higher levels of consumer optimism, both positive indicators for the economy. However, unrestrained growth can result in inflationary pressures. Thus this report can be used as a leading indicator for inflationary pressures.

Housing Equity Withdrawal-HEW

Housing equity withdrawal (HEW) is new borrowing secured on dwellings that is not invested in the housing market (e.g. not used for house purchase or home improvements), so it represents additional funds available for reinvestment or to finance consumption spending.

Housing Starts

The number of residential building construction projects begun during a specific period of time, usually a month; a key economic indicator.

HPI

House Price Index

Hyperinflation

A period of rapid inflation that leaves a country's currency virtually worthless.

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IBD/TIPP Economic Optimism Index

The IBD/TIPP Economic Optimism Index is the earliest and most authoritative take on consumer confidence each month and predicts with 90% reliability monthly changes in sentiment in well-known polls by The Conference Board and the University of Michigan. The IBD/TIPP Economic Optimism Index is based on a survey of 1,000-plus adults chosen at random nationwide. The poll is generally conducted in the first week of the month and has a margin of error of plus or minus 3.1 percentage points. The TIPP Economic Optimism Index is based upon responses to three questions: (1) In the next 6 months, do you think that economic conditions in the country will be better, worse or about the same as compared to now? (2) In the next 6 months, do you think that your personal financial situation will be better, worse or about the same as compared to now? (3) How satisfied are you with the current federal economic policies meant to keep the economy going in the right direction: Very satisfied, somewhat satisfied, not very satisfied or not at all satisfied?

ICCH=International Commodities Clearing House Limited

A clearing house based in London operating world wide for many futures markets.

ICSC

International Council of Shopping Centers

ICSC-UBS Store Sales

This weekly measure of comparable store sales at major retail chains, published by the International Council of Shopping Centers, is related to the general merchandise portion of retail sales. It accounts for roughly 10 percent of total retail sales. The ICSC-UBS index is one of the most timely indicators of consumer spending, since it is reported every week. It gets extra attention around the holiday season when retailers make most of their profits. It is also a useful indicator when special factors can cause economic activity to momentarily slide. For instance, it was widely watched in the aftermath of Hurricanes Katrina and Rita which hit New Orleans and the Gulf Coast in 2005.

IEA

International Energy Agency

IFEMA

International Foreign Exchange Master Agreement.

IFO

Institut für Wirtschaftsforschung An der Universität München (German: Institute for Economic Research at the University of Munich)

ILO

International Labor Organization

IMF

International Monetary Fund, established in 1946 to provide international liquidity on a short and medium term and encourage liberalization of exchange rates. The IMF helps its members to tide over the balance of payments problems with supplying the necessary loans.

IMM=International Monetary Market

The International Monetary Market (IMM), largely the creation of Leo Melamed, is part of the Chicago Mercantile Exchange (CME), the largest futures exchange in the United States and the second largest in the world after Eurex, for the trading of futures contracts and options on futures. The IMM was started on May 16, 1972. Two of the more prevalent contracts traded are currency futures and interest rate futures.

Implied Rates

The interest rate determined by calculating the difference between spot and forward rates.

In-the-Money

A call option is in-the-money if the price of the underlying instrument is higher than the exercise/strike price. A put option is in-the-money if the price of the underlying instrument is below the exercise/strike price.

Inconvertible Currency

Currency which cannot be exchanged for other currencies either because it is forbidden by the foreign exchange regulations or the currency witnesses extreme volatility that it is not percieved to be a safe haven for parking the funds.

Index Linking

The periodic adjustment of the money values of some regular scheduled payments based on the movement of the CPI or some other price index. The payments may be wages or salaries, social security or other pensions, other social security benefits, rents, interest payments, etc.

Index of Consumer Confidence

The Index of Consumer Confidence (CCI) measures how people feel about the United States economy. It is issued monthly by The Conference Board, an independent economic research organization, and is based on 5,000 households. Such measurement is indicative of consumption component level of the gross domestic product. The Federal Reserve looks at the CCI when determining interest rate changes, and it also affects stock market prices.

Indicative Quote

In forex trading, a currency quote that is provided by a market maker to a trading party but that is not firm. In other words, when a market maker provides an indicative quote to a trader, the market maker is not obligated to trade the given currency pair at the price or the quantity stated in the quote. Contrast this to a firm quote, in which a market maker guarantees a specified bid or ask price to a trader up to the maximum quantity specified in the quote.
Market makers will typically provide indicative quotes if a trader requests a quote for a currency pair but does not specify the quantity to be traded, or if there is some doubt as to the market maker's ability to transact the currency pair at the bid or ask quoted. The bottom line is that traders can rely on indicative quotes as a reasonable estimate of the exchange rate at which they can enter their currency trade, but there is no guarantee that this will be the rate they get.

Indirect quote

See reciprocal currency.

Industrial New Orders

The value of new contracts for goods produced by the manufacturing sector. A rising level of Industrial New Orders forecasts increased production and a rising GDP. There are two headline numbers released for this report, month to month and annualized change.

Industrial Production

The index of industrial production measures the physical output of the nation's factories, mines and utilities

Industrial Production Index-IPI

An indicator that shows the production output from industrial activities, such as mining, manufacturing and utilities. It is released by the Federal Reserve Board each month.

Initial Margin
This is the deposit required by a broker in order for a trader to start a transaction.

Initial Margin Requirement

The minimum portion of a new security purchase that an investor must pay for in cash.

Instruction

The specification of the banks at which funds shall be paid upon settlement.

Inter-dealer Broker

A specialist broker who acts as an intermediary between market-makers who wish to buy or sell securities to improve their book positions, without revealing their identities to other market-makers.

Interbank Rates

The Foreign Exchange rates at which large international banks quote other large international banks.

Interest Rate Futures

An Interest Rate Future is a futures contract with an interest-bearing instrument as the underlying asset. Examples include Treasury-bill futures, Treasury-bond futures and Eurodollar futures. The global market for exchange-traded interest rate futures is notionally valued by the Bank for International Settlements at $5,794,200 million in 2005.

Interest Rate Risk

The potential for losses arising from changes in interest rates

Intermarket Analysis

An analysis of an underlying asset that incorporates examinations of various markets. Namely, four markets are examined: currencies, commodities, stocks, and bonds. Intermarket analysis is centered on the idea that the four markets are correlated.

International Capital flows= TIC flows

Summarizes the flow of stocks, bonds, and money market funds to and from the United States . The headline figure is the difference in value between American purchases of foreign securities and foreign purchases of American securities, expressed in millions of dollars. The Treasury International Capital or TIC statement is a major component of the American capital account and gives valuable insight into foreign demand for American investments and dollar.

A positive figure indicates that more capital is entering the US than leaving as sales of American securities to foreigners exceed American purchases of foreign securities. Such positive figures suggest that American security markets are competitive with those of other countries. Foreign security purchases are especially important in the case of a trade deficit, as a positive figure can offset the depreciating effect of a trade shortfall. On the contrary, a negative or declining TICS figure reflects a declining capital flow picture. Outflows are indicative of weaker demand for US assets which puts downward pressure on the value of the dollar.

A key feature of the TIC data is its measurement of the types of investors the dollar has; governments and private investors. Usually, a strong government holding of dollar denominated assets signals growing dollar optimism as it shows that governments are confident in the stability of the U.S. dollar. Most importantly seems to be the purchases of Asian central banks such as that of Japan and China. Waning demand by these two behemoth US Treasury holders could be bearish for the US dollar. As for absolute amount of foreign purchases, the market generally likes to see purchases be much stronger than the funding needs of that same month's trade deficit. If it is not, it signals that there is not enough dollars coming in to match dollar going out of the country. As a side note, purchases by Caribbean central banks are generally seen to be less consistent since most hedge funds are incorporated in the Caribbean. Hedge funds generally have a much shorter attention span than other investors.

International Merchandise Trade-Canada

The difference between imports and exports of goods. Merchandise Trade differentiates itself from Trade Balance because it does not record intangibles like services, only reporting on physical goods. Because exports of tangibles like oil, gold and manufacturing contribute to a large part of Canada 's GDP, trade data can give critical insight into developments in the economy and into foreign exchange rates.

International Securities Dealers Association - ISDA

Organization which foreign currency exchange banks have formed to regulate inter-bank markets and exchanges.

International Swaps and Derivatives Association- ISDA

Organization defining the terms and conditions for derivative trades.

Intervention

Action by a central bank to effect the value of its currency by entering the market.

Intra-Day limit

Limit set by bank management on the size of each dealer's Intra Day Position.

Intra-Day Position

Open positions run by a dealer within the day. Usually squared by the close.

Intraday

During a single trading day.

Intrinsic Value

The amount by which an option is in-the-money. The intrinsic value is the difference between the exercise/strike price and the price of the underlying security.

Inverted Market

A futures market in which the nearer months are selling at premiums over the more distant months; characteristically, a market in which supplies are currently in shortage.

Investment Lending

The value of loans provided to individuals and corporations. An increase in Investment Lending forecasts growth in the economy since greater capital investments typically finance expansions of output and productivity and usually occur in periods of high consumer and business confidence. During these periods borrowers are willing to make investments because they hold reasonable expectations that their investments will pay off in the future. By making these investments, borrowers both increase private expenditure and enhance the future productive capacity of the economy. Though, this figure typically does not have significant impact upon markets.

The figure is reported as a seasonally adjusted percentage change from the previous month.

Invisibles

A term for exports and imports of services as distinct from merchandise

initial public offering: a company's first stock offering to the public.

ISDA - International Securities Dealers Association

Organization which foreign currency exchange banks have formed to regulate inter-bank markets and exchanges.

ISM

Institute for Supply Management

ISM Manufacturing

ISM Manufacuring assesses the state of US industry by surveying executives on expectations for future production, new orders, inventories, employment and deliveries. Though manufacturing accounts for a relatively small portion of GDP, fluctuations in manufacturing tend to bear the most responsibility for changes in GDP. Consequently, developments in manufacturing often front run trends in the overall economy, making the ISM Manufacturing figure a leading indicator of economic turnarounds. A pickup in demand for manufactured products after a period of recession, reflected by a higher ISM figure, strongly suggests a reversal upward. Conversely a slowdown in manufacturing orders and production during a boom suggests a slowing of the economy. The ISM Manufacturing Survey is valued for its timeliness, and indeed, during waning boom cycles analyst point out that ISM tends to be one of the biggest market moving economic releases. The reasoning lies within the ISM's Prices Paid and Employment subcomponents. These components reflect sentiment towards inflation and labor conditions - two of the market's most significant health indicators. Given that the ISM's timeliness, the information gleaned from such components precedes other market data (like Non-Farm Payrolls or CPI), making the ISM a significant indicator.

The headline figure is expressed as a diffusion index based on survey responses. For each category (production, new orders etc.), the index is calculated by adding the percentage of executive responding "higher" with half the percentage of "no change" responses, and subtracting the percentage of "lower" responses. The ISM manufacturing indicator is the aggregate of the results for all categories.

Retail Sales can be volatile due to seasonal fluctuations in demand. Thus the headline figure is the seasonally adjusted percentage change in sales compared to the previous year.

ISM Non-Manufacturing - United States

ISM Non-Manufacturing gauge of business conditions in non-manufacturing industries, based on measures of employment trends, prices and new orders. Though non-manufacturing sectors make up the majority of the economy, the ISM Non-Manufacturing has less market impact because non-manufacturing data tends to be more cyclical and predictable. However, these sectors do account for a considerable portion of CPI. As a result, the figure gives insight into conditions which can impact output growth and inflationary pressures.

ISO

ISO is the short name (not acronym) for the International Organization for Standardization.

ISTAT

Italian National Statistics Institute

Ivey Purchasing Managers Index (PMI) - Canada

A monthly measure of the change in purchases by corporate executives. One hundred and seventy-five managers distributed among different regions and sectors are asked: "Are your purchases higher, the same, or lower than the previous month" A headline value above 50 indicates an increase in purchases from the previous month and a value below 50 indicates a decrease.

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Jawbone

Announcements and statements by politicians or monetary authorities to influence decisions by business, consumer, or trade union sectors, often associated with forecasts and policy implications.

Job-to-applicant ratio

The job-to-applicant ratio shows how many positions are available to a job seeker

Jobber

A trader who trades for small, short-term profits during the course of a trading session, rarely carrying a position overnight.

Jobless Claims Change

Measures the number of people who claim unemployment benefits, but are actively seeking work. Released with the Claimant Count report, Jobless Claims Change serves as a barometer for the health of the UK labor market. It is similar to the Claimant Count except the headline figure is as an actual number, whereas the Claimant Count is a percentage. Higher job growth accompanies economic expansion and could spark inflationary pressures.

Jurisdiction Risk

(1) The risk inherent in placing funds in the Centre where they will be under the jurisdiction of a foreign legal authority. (2) The risk in making a loan subject to the laws of another country.

Juristiction

The geographical area over which a court or government body has the power and right to exercise authority.

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Key currency

One of the national currencies (dollar, euro, yen, etc.) or IMF's special drawing rights (SDR) used by a country to hold its foreign currency reserves and gold for settling international trade transactions and other obligations. Also called reserve currency.

Kiwi

Slang for the New Zealand dollar.

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Labor Cash Earnings - Japan

The average amount of pre-tax earnings per regular employee, including overtime pay and bonuses. Though the report does not take into account all sources of household income (accumulated wealth and capital gains from financial assets are omitted), Labor Cash Earnings accurately reflects the spending ability of domestic consumers, one of the driving forces behind economic growth. Because growth in wages fuels higher consumption, rising Labor Cash Earnings generally lead to higher inflation.

Labour Productivity - Canada

Average productivity level of Canadian workers. Labour Productivity is calculated by dividing the gross domestic product (GDP) by the number of hours worked, yielding output per hour, which is the key measure of productivity growth. The availability of better technology and higher levels of education among the workforce are factors commonly attributed to increased productivity. Growth in labour productivity is usually seen as a sign of a healthy economy because higher productivity allows higher output for a fixed population. Rising Labour Productivity can also offset inflationary pressures associated with economic growth and spending. Economic expansion attributed to increased Labour Productivity will not result in inflation, meaning that central banks will not need to increase interest rates during times of high growth.

Large Company

In the manufacturing sector, all companies with total employment of 50 or more were included in the large company partition. In the nonmanufacturing sector, all companies with total employment of 15 or more were included in the large company partition.

Large Retailers' Sales

The total value of goods sold in large department stores, chain convenience stores, and supermarkets in a particular month. The report serves as a direct gauge of consumption and consumer confidence. Consumer spending is one of the most important leading indicators for the Japanese economy. An increasing number of sales can signal consumer confidence and economic growth, but higher consumption can also leads to inflationary pressures.

Last Trading Day

The day on which trading ceases for an expiring contract.

Layoff

The elimination of jobs, often without regard to employee performance, usually when a company is experiencing financial difficulties.

Less developed countries, often used with respect to secondary debt market.

Lead

Payment of a financial obligation earlier than is expected or required.

Leading Indicator Index

Leading indicator index brings together a number of economic indicators that tend to precede the rest of the economy.

Leading Indicators

Statistics that are considered to predict future economic activity.

Leads and Lags

The effect on foreign trade payments of an anticipated move in the exchange rate, normally a devaluation. The importers speeden up the payment for the imports and exporters delay recieving payment for the exports.

Left-hand Side

Taking the left hand side of a two way quote i.e. selling the quoted currency

Letter of Credit

A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase the bank will be required to cover the full or remaining amount of the purchase.

Often used in international transactions to ensure that payment will be received. Due to the nature of internation dealings such as distance, differing laws in each country, and difficulty in knowing each party personally the use of letters of credit has become a very important aspect of international trade. The bank also acts on behalf of the buyer (holder of letter of credit) where the supplier will not be paid until the supplier confirms to the bank that the goods have been shipped.

Leverage

The degree to which an investor or business is utilizing borrowed money. Companies that are highly leveraged may be at risk of bankruptcy if they are unable to make payments on their debt; they may also be unable to find new lenders in the future. Leverage is not always bad, however; it can increase the shareholders' return on their investment and often there are tax advantages associated with borrowing. also called financial leverage

For example, suppose a trader puts down $1,000 as a margin in order to control $100,000. In this case, the trader's leverage would be 100:1 because the trader controls one-hundred times what he put down. Likewise, his level of margin would be 1% because only 1% was required to open the larger position

Liability

A company's legal debts or obligations that arise during the course of business operations. These are settled over time through the transfer of economic benefits including money, goods or services.

Recorded on the balance sheet (right side), liabilities include loans, accounts payable, mortgages, deferred revenues and accrued expenses. Liabilities are a vital aspect of a company's operations because they are used to finance operations and pay for large expansions. They can also make transactions between businesses more efficient. For example, the outstanding money that a company owes to its suppliers would be considered a liability.

Outside of accounting and finance this term simply refers to any money or service that is currently owed to another party. One form of liability, for example, would be the property taxes that a homeowner owes to the municipal government.

Current liabilities are debts payable within one year, while long-term liabilities are debts payable over a longer period.

LIBOR

London Interbank Offered Rate
a.An interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market. The LIBOR is fixed on a daily basis by the British Bankers' Association. The LIBOR is derived from a filtered average of the world's most creditworthy banks' interbank deposit rates for larger loans with maturities between overnight and one full year.
b.The LIBOR is the world's most widely used benchmark for short-term interest rates. It's important because it is the rate at which the world's most preferred borrowers are able to borrow money. It is also the rate upon which rates for less preferred borrowers are based. For example, a multinational corporation with a very good credit rating may be able to borrow money for one year at LIBOR plus 4 or 5 points. The LIBOR is the world's most widely used benchmark for short-term interest rates. It's important because it is the rate at which the world's most preferred borrowers are able to borrow money. It is also the rate upon which rates for less preferred borrowers are based. For example, a multinational corporation with a very good credit rating may be able to borrow money for one year at LIBOR plus 4 or 5 points.
Countries that rely on the LIBOR for a reference rate include the United States, Canada, Switzerland and, of course, England.

LIBOR - London Inter Bank Offer Rate

British Bankers' Association average of interbank offered rates for dollar deposits in the London market based on quotations at 16 major banks. Effective rate for contracts entered into two days from date appearing.

Life of Contract

The period between the beginning of trading in a particular future and the expiration of trading.

LIFFE

London International Financial Futures Exchange.

Limit

A maximum or minimum amount

Limit Down

Maximum price drop allowed on a futures contract in a single trading day.

Limit Move

The largest price change allowed for a given futures contract in a single day, as determined by the exchange. also called maximum price fluctuation.

Limit Order

To avoid buying or selling a stock at a price higher or lower than you wanted, you need to place a limit order rather than a market order. A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. When you place a market order, you can't control the price at which your order will be filled. For example, if you want to buy the stock of a "hot" IPO that was initially offered at $9, but don't want to end up paying more than $20 for the stock, you can place a limit order to buy the stock at any price up to $20. By entering a limit order rather than a market order, you will not be caught buying the stock at $90 and then suffering immediate losses if the stock drops later in the day or the weeks ahead. Remember that your limit order may never be executed because the market price may quickly surpass your limit before your order can be filled. But by using a limit order you also protect yourself from buying the stock at too high a price. Some firms may charge you more for executing a limit order than a market order.

Limit Up

Maximum price increase allowed on a futures contract in a single trading day.

Limited Convertibility

When residents of a country are prohibited from buying other currencies even though non-residents may be completely free to buy or sell the national currency and the foreign institutional investors also have the liberty to buy and sell shares on the stock exchange of that country.

line of credit

An arrangement in which a bank or vendor extends a specified amount of unsecured credit to a specified borrower for a specified time period. also called credit line.

Liquid and Illiquid Markets

The ability of a market to buy and sell at ease with no impact on price stability. A market is described as liquid if the spread between the bid and the offer is small. Another measure of liquidity is the presence of buyers and sellers, with more players creating tighter spreads. Illiquid markets have fewer participants; thus, the spreads are wider and the risk to the short-term trader are greater.

Liquidity

1 Liquid Market - the degree to which market participants are willing to buy and sell at every price level.
Liquid markets are characterized a high level of trading actively preformed by a diverse group of traders (hedgers, corporations, governments, speculators).
Liquid markets are usually described as safer, since investors are more certain that they are able to get into or out of a trade in any market condition.

2 Liquid Asset - the degree to which an asset is able to be converted into quickly into cash. The classic examples of liquid assets are Money Market Accounts and Certificate of Deposits or in equities, Blue Chip stocks.

Liquidity Risk

The risk stemming from the lack of marketability of an investment that cannot be bought or sold quickly enough to prevent or minimize a loss.

Local

A futures trader who normally trades on an exchange on his/her own account.

Locked Market

A market is locked when the bid price equals the asked price.

London Inter Bank Offer Rate (LIBOR)

British Bankers' Association average of interbank offered rates for dollar deposits in the London market based on quotations at 16 major banks. Effective rate for contracts entered into two days from date appearing.

Long

In foreign exchange, when a currency pair is bought, it is understood that the primary currency in the pair is 'long', and the secondary currency is 'short'.

Long - Position

A position that was obtained by buying in anticipation of an increase in price.

Long Hedge

The purchase of futures contracts for price protection purposes, as a defensive position against an increase in cash prices, or falling interest rates. The purchase of a futures contract or call option to protect a short position against possible increases in the prices of commodities, currencies, indexes, or securities. For example, an investor might purchase a futures contract on fixed-income securities to protect against a decline in interest rates. Also called buying hedge.

Long/Short

A trader is in a LONG POSITION when she buys a currency pair.
Shorting is the opposite of going long. The trader is in a SHORT POSITION when she sells a currency pair.

For example, when a trader buys EUR/USD, she is "longing" the Euro while at the same time "shorting the US dollar. If she were to decide to sell EUR/USD, she is "shorting" Euros and "Longing" the US dollar.

Lot

A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.

LSE

London Stock Exchange

LETTER-M

M0

Cash in circulation . Only used by the UK.

M1

Cash in circulation plus demand deposits at commercial banks. There are variations between the precise definitions used by national financial authorities.

machin tool

A machine tool is a powered mechanical device, typically used to fabricate metal components of machines by machining, which is the selective removal of metal. The term machine tool is usually reserved for tools that used a power source other than human movement, but they can be powered by people if appropriately set up. Many historians of technology consider that the true machine tools were born when direct human involvement was removed from the shaping or stamping process of the different kinds of tools. For instance, they consider that lathe machine tools were invented around 1751 by Jacques de Vaucanson because he was the first to mount the cutting instrument on a mechanically adjustable head, taking it out of the hands of the operator

Maintenance

A set minimum margin that a customer must maintain in his margin account

Majors

These are the most popular currency pairs available for trading and include EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD and AUD/USD. Less traded pairs are known as 'Exotics'.

Make a Market

A dealer is said to make a market when he quotes both the bid and offer prices at which he stands ready to buy and sell.

Managed Float

When the monetary authorities intervene regularly in the market to stabilise the rates or to push the exchange rate in a required direction. It is also called the dirty float which we have in India.

Manufacturing I/S Ratio - Canada

The ratio of inventory to shipments at Canadian manufacturing firms. By examining inventories and shipments, the figure is able to gauge to what degree manufacturing firms are satisfying market demand. Inventories include goods not yet sold by firms. Growing inventories are a sign of declining demand as unsold goods pile up in warehouses. Shipments data, on the other hand, is indicative of market demand.
Accordingly, a Manufacturing I/S Ratio greater than 1 suggests an inventory build-up and decreasing demand for manufactured goods, while a ratio less than 1 suggests an inventory reduction and increasing demand for manufactured goods. The I/S Ratio can also be interpreted as an estimate of the time (in months) that it would take to exhaust inventories, holding shipments constant.

Manufacturing Shipments

The ratio of inventory to shipments at Canadian manufacturing firms. By examining inventories and shipments, the figure is able to gauge to what degree manufacturing firms are satisfying market demand. Inventories include goods not yet sold by firms. Growing inventories are a sign of declining demand as unsold goods pile up in warehouses. Shipments data, on the other hand, is indicative of market demand.
Accordingly, a Manufacturing I/S Ratio greater than 1 suggests an inventory build-up and decreasing demand for manufactured goods, while a ratio less than 1 suggests an inventory reduction and increasing demand for manufactured goods. The I/S Ratio can also be interpreted as an estimate of the time (in months) that it would take to exhaust inventories, holding shipments constant.
The data used to calculate the I/S ratio can be found in the monthly survey of manufacturing released by Statistics Canada each month. The I/S ratio is also a component of the Canadian Leading Indicator Index.

Margin

Margin is a good faith deposit that a trader puts up as collateral to hold a position. The amount of margin that the trader puts up determines his leverage. For example, suppose a trader puts down $1,000 as a margin in order to control $100,000. In this case, the trader's leverage would be 100:1 because the trader controls one-hundred times what he put down. Likewise, his level of margin would be 1% because only 1% was required to open the larger position.

Margin Call

A call for additional funds in a margin account either because the value of equity in the account has fallen below a required minimum (also termed a maintenance call) or because additional currencies have been purchased (or sold short).

Marginal Risk

The risk that a customer goes bankrupt after entering into a forward contract. In such an event the issuer must close the commitment running the risk of having to pay the marginal movement on the contract.

Mark-to-Market

Recording the price or value of a security, portfolio, or account on a daily basis, to calculate profits and losses or to confirm that margin requirements are being met.

Market Close

This refers to the time of day that a market closes. In the 24 hour-a-day foreign exchange market, there is no official market close. 5:00 PM EST is often referred to and understood as the market close because value dates for spot transactions change to the next new value date at that time.

Market Maker

A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial instrument.

Market Order

An order to buy or sell a stock immediately at the best available current price.

Market Rate

The current quote of a currency pair.

Market Risk

The risks that occur when general market pressures cause the value of an investment to fluctuate.

Market Timing

Attempting to predict future market directions, usually by examining recent price and volume data or economic data, and investing based on those predictions.

Market Value

1.Market value of a forex position at any time is the amount of the domestic currency that could be purchased at the then market rate in exchange for the amount of foreign currency to be delivered under the forex Contract.

2.The last reported sale price of a security, or the current bid and ask price in the context of an over-the-counter security. Also known as market price.

Market-Maker

A person or firm that provides liquidity making two-sided prices (bids and offers) in the market.

Markup

Premium

Maturity

The date on which payment of a financial obligation is due.

Maturity Date

(1) The last trading day of a futures contract. (2) Date on which a bond matures, at which time the face value will be returned to the purchaser. Sometimes the maturity date is not one specified date but a range of dates during which the bond may be repaid.

MBA

Mortgage Bankers Association of America

Merchandise Trade Balance

The Merchandise Trade Balance is a measure of "visible" trade, which is trade in goods like cars and electronics. Specifically it is the difference between Japan 's imports of goods and exports of goods, excluding services. A positive value indicates a trade surplus (exports exceed imports) while a negative value indicates a trade deficit (imports exceed exports). Movements in the Merchandise Trade Balance reflect altered demand for Japanese Yen, which can move the value of the currency. Positive growth in the trade balance may lead to a future appreciation of the Yen due to steady demand in exchange for Japanese exports. The Merchandise Trade report itself gives insight into changing trends regarding Japanese trade. Such developments are especially important for Japan , which is an export-oriented economy that has historically experienced large trade surpluses, any affect on this could have dramatic affect on the domestic economy. The headline figure is expressed as a percentage change from the last equivalent period, and a positive percentage change can indicate that export growth has exceeded import growth.

Micro economics

The study of the behavior of small economic units, such as that of individual consumers or households. opposite of macroeconomics.

Microcredit

A.the lending of very small amounts of money at low interest, esp. to a start-up company or self-employed person.

B.An extremely small loan given to impoverished people to help them become self employed. Also known as "microlending."

Mid-price or middle rate

The price half-way between the two prices, or the average of both buying and selling prices offered by the market makers.

Mine and Yours

Terms used by floor traders to signify buying and selling. Mainly used in forex transactions

If a trader wanted to buy something, he/she would type or say "Mine," as in "It's mine." If the trader wanted to sell, he/she would type or say "Yours," as in "It's yours."

Minimum price fluctuation

The smallest increment of market price movement possible in a given futures contract.

Mio

Million

MITI

Japanese ministry of International Trade & Industry.

MM

Money Markets

MOF

Ministry Of Finance

Momentum

The tendency of a currency pair to continue movement in a single direction.

Monetary Base-Japan

Currency supplied by the Bank of Japan. The Monetary Base includes all banknotes and coins in circulation plus all currency held as deposits by the Bank of Japan. As an official measure of the Japanese money supply, the Monetary Base will show the immediate impacts of monetary policy actions and can give an indication into the future direction of inflation. An expansion in the monetary base is generally inflationary while a decline will likely have the opposite effect.

Money Market

Highly liquid markets for short-term investing in monetary instruments and debts, typically maturing in less than one year. Because of large transaction cost relative to potential interest, transactions occur in large amounts and thus participants are mainly banks and other large financial institutions.

The total supply of money in circulation in a given country's economy at a given time. There are several measures for the money supply, such as M1, M2, and M3. The money supply is considered an important instrument for controlling inflation by those economists who say that growth in money supply will only lead to inflation if money demand is stable. In order to control the money supply, regulators have to decide which particular measure of the money supply to target. The broader the targeted measure, the more difficult it will be to control that particular target. However, targeting an unsuitable narrow money supply measure may lead to a situation where the total money supply in the country is not adequately controlled.

mortgage-backed security (MBS)

In finance, a mortgage-backed security (MBS) is an asset-backed security whose cash flows are backed by the principal and interest payments of a set of mortgage loans. Payments are typically made monthly over the lifetime of the underlying loans.

Moving Average

A technical analysis term meaning the average price of a security over a specified time period (the most common being 20, 30, 50, 100 and 200 days), used in order to spot pricing trends by flattening out large fluctuations. This is perhaps the most commonly used variable in technical analysis. Moving average data is used to create charts that show whether a stock's price is trending up or down. They can be used to track daily, weekly, or monthly patterns. Each new day's (or week's or month's) numbers are added to the average and the oldest numbers are dropped; thus, the average "moves" over time. In general, the shorter the time frame used, the more volatile the prices will appear, so, for example, 20 day moving average lines tend to move up and down more than 200 day moving average lines.

MPC-Marginal Propensity To Consume

A component of Keynesian theory, MPC represents the proportion of an aggregate raise in pay that is spent on the consumption of goods and services, as opposed to being saved.

Let's illustrate this with an example. Suppose you receive a bonus with your paycheck, and it's $500 on top of your normal annual earnings. You suddenly have $500 more in income than you did before. If you decide to spend $400 of this marginal increase in income on a new business suit, your marginal propensity to consume will be 0.8 ($400 divided by $500).

Mutual fund

An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments. In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund and, in effect, in each of its underlying securities. For most mutual funds, shareholders are free to sell their shares at any time, although the price of a share in a mutual fund will fluctuate daily, depending upon the performance of the securities held by the fund. Benefits of mutual funds include diversification and professional money management. Mutual funds offer choice, liquidity, and convenience, but charge fees and often require a minimum investment. A closed-end fund is often incorrectly referred to as a mutual fund, but is actually an investment trust. There are many types of mutual funds, including aggressive growth fund, asset allocation fund, balanced fund, blend fund, bond fund, capital appreciation fund, clone fund, closed fund, crossover fund, equity fund, fund of funds, global fund, growth fund, growth and income fund, hedge fund, income fund, index fund, international fund, money market fund, municipal bond fund, prime rate fund, regional fund, sector fund, specialty fund, stock fund, and tax-free bond fund.

LETTER-N-O-P-Q

LETTER-N

n.s.a

not seasonally adjusted

NAB

National Australia Bank

NAHB

National Association of Home Builders.

NAPM

National Association of purchasing management-An Affiliate of Institute for Supply Management

NAPM-Chicago

The National Association of Purchasing Management - Chicago compiles a survey and a composite diffusion index of business conditions in the Chicago area. Manufacturing and non-manufacturing firms are both surveyed, but until recently, market players have believed that the survey primarily covers the manufacturing sector. Readings above 50 percent indicate an expanding business sector. The NAPM - Chicago is considered a leading indicator of the ISM manufacturing index.

NAR

The National Association of Realtors

NBNZ

National Bank of New Zealand

Negative or bearish divergence

Occurs when the direction of the price of a currency disagrees with the condition of a technical indicator.

Net Position

The amount of currency bought or sold which have not yet been offset by opposite transactions.

Net Worth

Amount of assets which exceed liabilities; May also be known as stockholders equity or net assets. For an individual, the total value of all possessions such as houses, stocks, bonds, currencies and other securities, minus all outstanding debts, such as mortgage and loans.

New Housing Price Index - Canada

A component of the Consumer Price Index (CPI) that measures changes in prices for new homes. Higher housing prices suggest stronger consumer demand and growth in the housing market. At the same time, higher housing prices that accompany economic expansion often lead to inflationary pressures. The headline number is the percentage change in the index.

Note: The New Housing Price Index takes into account the quality and features of the new homes sold. For example, if selling prices for new homes are unchanged, but the features and quality of housing have increased (e.g. added swimming pool and better construction materials), then the price for new homes is considered to have fallen.

Nickel

US term for five basis points.

NIESR

National Institute of Economic and Social Research (Britain)

Noise

Price and volume fluctuations which do not provide meaningful information about the market's direction.

nominal

A quantity that is not adjusted for inflation.

Non Resident Bond Holdings - New Zealand

The monetary value of bonds held by non residents of New Zealand . Non Resident Bond Holdings measure the willingness of foreigners to finance New Zealand 's economy and government. A high value is indicative of a budget deficit and debt, suggesting that foreign investments are required to finance New Zealand 's continued patterns of spending.

Non-farm payroll

The non-farm payrolls report is one of the key indicators of the labor market in the US. The report tends to include information on salaries, wages, bonuses and net pay after deductions. A strong payrolls number indicates that companies are keeping a solid base of employees and is therefore perceived as positive for the economy.

Nostro Account

A foreign currency current account maintained with another bank. The account is used to receive and pay currency assets and liabilities denominated in the currency of the country in which the bank is resident.

A bank account that one bank holds with another bank in a foreign country. This account is usually held in the foreign country's currency, and is used to carry out transactions that are denominated in that foreign currency.

Note

A financial instrument consisting of a promise to pay rather than an order to pay or a certificate of indebtedness.

NYSE

New York Stock Exchange

NZIER

New Zealand Institute of Economic Research

LETTER-O

OCO - One Cancels the Other Order

A designation for two orders whereby one part of the two orders is executed the other is automatically cancelled.For example, an investor with limited funds may place an order to buy both stocks and bonds and specify that it's a "one-cancels-the-other-order." In other words, if the market favors stocks and they are bought, the order to buy bonds will be canceled. Conversely, if the market suggests bonds are the way to go, the order will be to buy bonds and the order to buy stocks will be canceled

OCR-Official Cash Rate

The Official Cash Rate (OCR) is the interest rate set by the Reserve Bank to meet the inflation target specified in the Policy Targets Agreement. The agreement signed in September 2002, between the Minister of Finance and the Governor of the Reserve Bank, requires the Reserve Bank to keep inflation, on average over the medium term, at between 1 and 3 percent per annum.

Odd Lot

A non standard amount for a transaction.

ODPM

Office of the Deputy Prime Minister (UK)

OECD

Organization for Economic Cooperation and Development

Off-Balance Sheet

Financing or the raising of money by a company that does not appear on the company's balance sheet, such as Interest Rate Swaps and Forward Rate Agreements.

Off-Shore

The operations of a financial institution which although physically located in a country, has little connection with that country's financial systems. In certain countries a bank is not permitted to do business in the domestic market but only with other foreign banks. This is known as an off shore banking unit.

Offer

The price at which a currency pair or security is for sale; the quoted price at which an investor can buy a currency pair. This is also known as the 'ask', 'ask price', and 'ask rate'.

Offer - ask

The rate at which a dealer is willing to sell a currency. See Ask (offer) price

Official Reserve Assets - Japan

The wealth controlled by the Bank of Japan. Japan holds enormous reserves of foreign currencies, currently holding the largest foreign reserve of American Dollars in the world. Central Banks have recently moved to diversify their currency reserves; the shift has been away from the traditionally favored Dollar toward other currencies like the Euro. Because of the size and influence of the Bank of Japan's huge Reserve Assets, adjustments can radically alter the supply of a currency in the market and sway other banks to act. Long term trends in the Bank's reserve asset figures merit close attention.

All these assets help Japan ensure its financial well-being when faced with economic or geo-political issues. In particular, large foreign currency reserves give the BOJ the freedom to exert a measure of control over its exchange rate by manipulating the supply of foreign currencies.

official reserves

Holdings of gold and foreign currencies by official monetary institutions.

Offset

The closing-out or liquidation of a futures position.

The elimination or reduction of a current long or short position by making a transaction with the same security in the opposite direction. Also known as close out or even up.

Offsetting transaction

A trade which serves to cancel or offset some or all of the market risk of an open position.

Offshore

The operations of a financial institution which although physically located in a country, has little connection with that country's financial systems. In certain countries a bank is not permitted to do business in the domestic market but only with other foreign banks. This is known as an off shore banking unit.

Old Lady

Old lady of Threadneedle Street, a term for the Bank of England.

One Cancels Other Order

Where the execution of one order automatically cancels a previous order also referred to as OCO or 'One cancels the other'.

One Cancels the Other Order - OCO

A designation for two orders whereby one part of the two orders is executed the other is automatically cancelled.

Open Market Operations

The central bank operations in the markets to influence exchange and interest rates.

Open Order

Buy or sell order that remains in force until executed or cancelled by the customer.

Option

A contract conferring the right but not the obligation to buy (call) or to sell (put) a specified amount of an instrument at a specified price within a predetermined time period.

Option Premium

The option premium is the price the buyer of the options contract pays for the right to buy or sell a security at a specified price in the future.

Option Class

All options of the same type - calls or puts -listed on the same underlying instrument.

Option Series

All options of the same class having the same exercise/strike price and expiration date.

Options

An agreement that allows the holder to have the option to buy/sell a specific currency at a certain price within a certain time. Two types of options – call and put. A call is the right to buy while a put is the right to sell. One can write or buy call and put options. Options do not have as much liquidity as the underlying (spot) currency.

Order

A customer's instructions to buy or sell currencies.

OTC - Over the Counter

Used to describe any transaction that is not conducted over an exchange.

A security that is not traded on an exchange, due to an inability to meet listing requirements. For such securities, brokers and dealers negotiate directly with one another over computer networks and by phone, and their activities are monitored by the NASD. Also known as unlisted.

Out-of-the-Money

A put option is out-of-the-money if the exercise/strike price is below the price of the underlying instrument. A call option is out-of-the money if the exercise/strike price is higher than the price of the underlying instrument.

Outperform

In general, this means to do better than some particular benchmark. Mutual Fund XYZ is said to outperformthe S&P500 if its return exceeds the S&P500 return. However, this language does not take risk into account. That is, one might have a higher return than the benchmark in a particular year because of higher risk exposure. Outperform is also a term used by analysts to describe the prospects of a particular company. Usually, this means that the company will do better than its industry average. Related: underperform.

Output

1.Manufacturing: Amount of energy, work, goods or services, etc. produced by a machine, factory, firm, or an individual in a period.

2.Contracting: Desired result from a project or contractor.

Over the Counter - OTC

A decentralized market (as opposed to an exchange market) where geographically dispersed dealers are linked by telephones and computer screens.

Overall Household Spending

A survey of both wage-earning and non-working households, such as those classified as single-member, unemployed, or retired. The headline figure is the percentage change in average spending per household from the previous year. Increases in household spending are favorable for the Japanese economy because high consumer spending generally leads to higher levels of economic growth. Higher spending is also a sign of consumer optimism, as households confident in their future outlook will spend more. At the same time accelerated growth exerts inflationary pressure, which can lead to interest rate increases in the future.

Overbought

A term used to characterize a market in which currency prices have risen at a pace that is above typical market acceleration, and hence is due for a retracement.

Overheated /Economy

Is an economy on a high growth rate trajectory placing pressure on the production capacity resulting in increased inflationary pressures and higher interest rates.

Overnight Limit

The maximum amount of a net long or short position that a dealer can carry over into the next dealing day.

Overnight Position

Trader's long or short position in a currency at the end of a trading day.

Overnight trading

The buying or selling of currencies between 9pm and 8am local time. This type of transaction occurs when an investor takes a position at the end of the trading day in a foreign market that will be open while the local market is closed. The trade will be executed sometime that evening or early morning.

Oversold

The opposite of overbought; exists when the price of a currency decelerates at an abnormally fast rate, and hence is due for an upwards reversal.

A situation arising in the market after prompt and significant downturn of the price (Forex rate).

LETTER-P

Package Deal

An order that contains a number of exchange or deposit items that must be completed simultaneously, or not at all. Package deals allow traders to ensure specific prices or times to maturity for multiple assets.

A trader may want to participate in a package deal to properly execute an investment strategy. For example, let's say an investor wants to enter into a long-short strategy, where he or she purchases one stock and short sells another. Making this order a package deal will protect the investor in case either stock is not immediately available for purchase or sale. The investor may not want the exposure of being only long or short for the period of time required to complete the second transaction.

Par

(1) The nominal value of a security or instrument. (2) The official value of a currency.

Parities

The value of one currency in terms of another.

Parity

Official rates in terms of SDR or other pegging currency.

Participation Rate

A measure of the participating portion of an economy's labor force.

The participation rate is important in determining the number of individuals who are willing to work, are working, or are actively looking for work. Those who have no interest in working are not included in the participation rate.

payroll

1 Total amount a business pays periodically for its workers.

2 List of employees, including information on salaries, wages, bonuses, and net pay after deductions.

Pegging

A form of price stabilization; typically used to stabilize a country’s currency by making it fixed to the exchange rate with another country. A method of stabilizing a country's currency by fixing its exchange rate to that of another country.

Pending Home Sales Index

The National Association of Realtors developed the pending home sales index as a leading indicator of housing activity. As such, it is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed. It usually takes four to six weeks to close a contracted sale.

Pending Order

Pending order is an instruction to open a position when the current price reaches the order level.
There are four types of pending orders:
Buy Stop - an order to open a Buy position at a price higher than the price at the moment of placing the order
Sell Stop - an order to open a Sell position at a price lower than the price at the moment of placing the order
Buy Limit - an order to open a Buy position at a lower price than the price at the moment of placing the order
Sell Limit - an order to open a Sell position at a price higher than the price at the moment of placing the order

Performance

The results of activities of an organization or investment over a given period of time.

Permitted Currency

It means a foreign currency which is freely convertible i.e a currency which is permitted by the rules and regulations of the country concerned to be converted into major reserve currencies and for which a fairly active and liquid market exists for dealing against the major currencies.

Personal Consumption Expenditure

A measure of price changes in consumer goods and services. It consists of the actual and imputed expenditures of households and includes data pertaining to durables, non-durables, and services. It is essentially a measure of goods and services targeted towards individuals and consumed by individuals

Personal Consumption Expenditure (PCE) - United States

Comprehensive measure of how much consumers spend each month, counting expenditures on durable goods, consumer products, and services. Personal Consumption is a comprehensive measure of GDP; consequently the figure is watched as an indicator for economic trends. Spending also has direct affect on inflationary pressures.

Pip

The smallest increment of change in a foreign currency price, either up or down.

Pips

The smallest unit of price for any foreign currency. Digits added to or subtracted from the fourth decimal place, i.e. 0.0001. Also called Points.

Platform

The word platform is used in several different contexts, usually referring to some kind of standing surface used to support things, give them stability, or visibility

PMI

purchasing managers' index

PMI-New Zealand

"PMI" usually stands for Purchasing Managers' Index. United States and Euro-Zone PMI is different from the New Zealand PMI, which stands for Performance of Manufacturing Index.

Point

(1) 100th part of a per cent, normally 10,000 of any spot rate. Movement of exchange rates are usually in terms of points. (2) One percent on an interest rate e.g. from 8-9%. (3) Minimum fluctuation or smallest increment of price movement.

Political Risk

Exposure to changes in governmental policy which will have an adverse effect on an investor's position.

Position

To buy or sell securities in order to establish a net long or a net short position.

Position - Long

A position that was obtained by buying in anticipation of an increase in price.

PPI

Producer Price Indices. See wholesale price indices.

Premium

1.The amount by which a bond or stock sells above its par value.

2.The amount that the buyer of an option pays to the seller.

Price

The price at which the underlying currency can be bought or sold.

Price Transparency

The ability of all market participants to "see" or deal at the same price.

Primary market

Where a newly issuedsecurity is first offered. All subsequent trading of this security occurs is done in the secondary market.

Prime Rate

The interest rate that commercial banks charge their most creditworthy borrowers, such as large corporations. The prime rate is a lagging indicator. also called prime.

Prime Rate -US

The interest rate that commercial banks charge their most reliable borrowers (i.e. large corporations). The prime rate is a lagging indicator. Also known as prime.

Principal

A dealer who buys or sells stock for his/her own account.

Principal Value

The original amount invested by the client.

Private Capital Expenditure

The value of actual and expected purchases of new capital. Capital purchases are investments in productive capacity like new machinery, plants, or improvements & additions to existing assets. Such purchases are made by companies optimistic that costs will be surmounted by future demand. For instance, Gold mines may purchase new Gold mining equipment to increase productivity in order to meet rising demand for Gold. Private Capital Expenditures generally indicate higher business confidence and reflect a healthy economy

Private Consumption - Germany - Euro-zone

Represents household spending on all goods and services. Fluctuations in Private Consumption reflect the country's spending mood. As this figure trends positive it indicates that consumers are stimulating the economy by spending more. However, one cannot size up economic growth solely based on this report. Individuals can increase consumption unsustainably if not matched by income growth.

Producer & Import Prices-switzerland

Tracks inflation in producer and import prices in Switzerland . The headline figure is the percentage change in the index from the previous period. Changes in this index will generally precede changes in the consumer price index, as higher import costs and producer prices tend to eventually be passed to consumers. As with any indicator of inflation, increases in producer and import prices tend to act as an appreciating weight for the Swiss franc because inflationary pressures are almost always met with interest rate increases from the Swiss central bank.

Producer Price Index (Input) - UK

A monthly survey that measures change in input prices as incurred by UK manufacturers. Input prices include the cost of materials used plus operation costs of running the business. The index can be used as a measure of inflation, given that higher input costs will likely be passed on from producers to consumers in the form of higher retail prices. Th e figure is also calculated as Core Input PPI, which excludes volatile inputs such as food and energy that may distort the data. As such, the core figure is a more appropriate measure of inflation.

Producer Price Index (Output) - UK

A monthly survey that measures the price changes of goods produced by UK manufacturers. The figure is also known as "Factory Gate Price" because it usually matches the price of goods when they first leave the factory. Increased prices in manufacturing typically lead to higher retail prices for consumers. However, it is also likely that higher output prices are caused by manufacturers charging a higher premium due to higher demand for their goods. Consequently, market trends in consumption should be considered with Output PPI to avoid data misinterpretation.

productivity

A measure of how much an employee produces for each hour of work

Profit Taking

The action of selling stock to cash in on a sharp rise. This action pushes prices down temporarily. When traders are profit taking, the implication is that there is an upward trend in the security.

PSNCR

Public Sector Net Cash Requirements

public finances-UK

The amount of money financed to the UK government. A higher value indicates a worsening fiscal condition for the British Government as the public sector is unable to maintain its spending patterns without further financing. As with any economy, budget deficits are unfavorable and viewed as bearish for the Pound.

Public Sector Net Borrowing - UK

The amount of new debt held by the UK governments. In the long run, the public sector account must be in balance in order for the economy to be sustainable. If the UK spends more than what it earns, it must finance this budget deficit with an increase in Net Borrowing. Because budget deficits are generally unfavorable for the economy, growth in Net Borrowing is considered bearish for the Pound. Likewise, if Net Borrowing is negative, it means the UK is running a budget surplus and, rather than borrowing money, is a net lender. The headline number is the net borrowing for the previous month in billions of Pounds.

Purchasing Power Parity

The theory that, in the long run, identical products and services in different countries should cost the same in different countries. This is based on the belief that exchange rates will adjust to eliminate the arbitrage opportunity of buying a product or service in one country and selling it in another. For example, consider a laptop computer that costs 1,500 Euros in Germany and an exchange rate of 2 Euros to 1 U.S. Dollar. If the same laptop cost 1,000 dollars in the United States, U.S. consumers would buy the laptop in Germany. If done on a large scale, the influx of U.S. dollars would drive up the price of the Euro, until it equalized at 1.5 Euros to 1 U.S. Dollar - the same ratio of the price of the laptop in Germany to the price of the laptop in the U.S. The theory only applies to tradable goods, not to immobile goods or local services. The theory also discounts several real world factors, such as transportation costs, tarrifs and transaction costs. It also assumes there are competitive markets for the goods and services in both countries.

Put Call Parity

The equilibrium relationship between premiums of call and put options of the same strike and expiry.

Put Option

A put option confers the right but not the obligation to sell currencies, instruments or futures at the option exercise price within a predetermined time period.

LETTER-Q

Quanto option

An option in which the foreign exchange risk in the underlying instrument has been removed.

Quote

A simultaneous bid and offer in a currency pair.

QV=Quotable Value New Zealand, Ltd

Quotable Value Limited (QV) is New Zealand's largest valuation and property information company. QV operates from 22 offices throughout New Zealand and with subsidiary companies in three states of Australia.
QV was formed in July 1998. The establishment of the company has led to three unique areas of operation: Valuations, Online Services and Rating and Taxation, each dedicated to meeting and exceeding the needs of customers in specific markets.

LETTER-R-S-T

LETTER-R

Rally

A recovery in price after a period of decline.
A substantial rise in the price of a security, commodity, or overall market, following a decline.

Range

The difference between the highest and lowest price of a future recorded during a given trading session.

Rate

Price at which a currency can be purchased or sold against another currency.

Rate of Inflation

The Consumer Price Index is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly changes in the CPI represent the rate of inflation.

RBA

Reserve Bank of Australia

RBNZ

Reserve Bank of New Zealand

RBNZ Official Cash Rate

The Official Cash Rate (OCR) is the interest rate set by the Reserve Bank to meet the inflation target specified in the Policy Targets Agreement. The agreement signed in September 2002, between the Minister of Finance and the Governor of the Reserve Bank, requires the Reserve Bank to keep inflation, on average over the medium term, at between 1 and 3 percent per annum.

The OCR was introduced in March 1999 and is reviewed eight times a year by the Bank. Monetary Policy Statements are issued with the OCR on four of those occasions. Unscheduled adjustments to the OCR may occur at other times in response to unexpected or sudden developments, but to date this has occurred only once, following the 11 September 2001 attacks on the World Trade Centre in New York.

The OCR influences the price of borrowing money in New Zealand and provides the Reserve Bank with a means of influencing the level of economic activity and inflation. An OCR is a fairly conventional tool by international standards. In the past, the Reserve Bank used a variety of tools to influence inflation, including influencing the supply of money and signalling desired monetary conditions to the financial markets. Such mechanisms were more indirect, more difficult to understand, and less conventional.

Reaction

A decline in prices following an advance.

Realized and Unrealized Profit

Unrealized profit is a gain from an increase in the price of a currency that has not been closed or cashed in. Realized profits are made from the cashing in of the unrealized gain.

Recession

A decline in business activity. Often defined as two consecutive quarters with a real fall in GNP.

Recovery

A period in a business cycle following a recession, during which the GDP rises.

Rectangle

In technical analysis, a chart pattern in which the price of a security bounces back and forth between two horizontal lines. Because a rectangle is thought to occur when stock is being distributed or accumulated by knowledgeable investors, a major price movement is expected once the stock breaks out of the rectangle formation
A rectangle describes a price pattern where supply and demand are in approximate balance for an extended period of time. The shares move in a narrow range, hitting resistance at the rectangle's top and finding support at its bottom. It is a pattern of indecision, one in which the bulls and bears are approximately equally powerful. Ultimately, one side or the other wins the tug of war and the shares break out or break down. Typically, the breakout or breakdown can be measured by the height of the rectangle.

Red book

The Redbook Index measures same-store sales at general-merchandise retailers representing about 9,000 locations. The sales are considered an industry benchmark because they exclude results from new or closed locations.

The Johnson Redbook Index is a proprietary indicator of growth in retail sales, and provides advanced estimates of trends in retail sales ahead of official releases and company reports in an easy-to-read four-page report. The weekly indicator is made public every Tuesday morning, with clients receiving notice via conference call, e-mail or fax prior to public release.

REINZ=Real Estate Institute of New Zealand

The Real Estate Institute of New Zealand is the professional body for the real estate industry in New Zealand.

Relative Return

The return that an asset achieves over a period of time compared to a benchmark. The relative return is the difference between the absolute return achieved by the asset and the return achieved by the benchmark.

Relative returns are most often used when reviewing the performance of a mutual fund manager. Because holders of mutual funds are charged management fees, they expect a manager to achieve returns higher than the benchmark index. For example, if the fund you are holding achieves an absolute return of 12% over the past year while the benchmark index provides a return of 15%, then the fund has achieved a relative return of -3% for the year.

Relative Strength Index - RSI

The RSI is a price-following oscillator that ranges between 0 and 100. A popular method of analyzing the RSI is to look for a divergence in which the price of the currency is making a new high, but the RSI is failing to surpass its previous high. This divergence is an indication of an impending reversal. When the RSI then turns down and falls below its most recent trough, it is said to have completed a "failure swing." The failure swing is considered a confirmation of the impending reversal in the price of the currency.

REPO --Repurchase

This type of trade involves the sale and later repurchase of an instrument, at a specified time and date. Occurs in the short-term money market.

Repurchase --REPO

This type of trade involves the sale and later repurchase of an instrument, at a specified time and date. Occurs in the short-term money market.

Reserve Currency

One of the national currencies (dollar, euro, yen, etc.) or IMF's special drawing rights (SDR) used by a country to hold its foreign currency reserves and gold for settling international trade transactions and other obligations. Also called reserve currency.

Reserve Requirements

Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers. This money must be in the bank's vaults or at the closest Federal Reserve Bank.

Reserves

Funds held against future contingencies, normally a combination of convertible foreign currency, gold, and SDRs. Official reserves are to ensure that a government can meet near term obligations. They are an asset in the balance of payments.

Resistance

Price level at which technical analysts note persistent selling of a currency.

Resistance Point or Level

A price recognized by technical analysts as a price level which a currency pair has trouble breaking through it to the upside, but which is likely to result in a significant price increase if broken. There are different levels of resistance levels for different time frames.

Retail Outlet

retail outlet

Retail Price Index

Measurement of the monthly change in the average level of prices at retail, normally of a defined group of goods.

Retail Trade

The total value of goods and services sold each month at retail outlets. The report serves as a direct gauge of consumption and consumer confidence. Consumer spending is one of the most important leading indicators for the Japanese economy. An increasing number of sales signal consumer confidence and economic growth, but higher consumption also leads to inflationary pressures. The headline figure they release is a year-on-year percentage change in the nominal value of items sold.

Retail Trade Monthly - Japan

The total value of goods and services sold each month at retail outlets. The report serves as a direct gauge of consumption and consumer confidence. Consumer spending is one of the most important leading indicators for the Japanese economy. An increasing number of sales signal consumer confidence and economic growth, but higher consumption also leads to inflationary pressures. The headline figure they release is a year-on-year percentage change in the nominal value of items sold.

Retracements

Synonymous with the term correction; used to denote a temporary reversal in the overall trend of the market to accommodate for excessive acceleration or deceleration of a movement in the price of a currency.

Reuter Dealing

One electronic, screen-based currency trading platform.

Revaluation

To increase the legal exchange value of (a nation's currency) relative to other currencies.

Revenue

1.The total amount of money received by a company for goods or services sold before deducting expenses.

2.government income due to taxation

Reversal

Change in the general direction of a market, such as a rally. also called trend reversal.

RICS

Royal Institution of Chartered Surveyors
The Royal Institution of Chartered Surveyors (RICS) is the official representative professional body which regulates property professionals and surveyors.
The institution was founded in the United Kingdom after a meeting of 20 surveyors at the Westminster Palace Hotel on 23 March 1868. The institution is still based in the United Kingdom, however, as at 2005 the institution is represented or affiliated in excess of 120 countries and boasts a 136,000 strong worldwide membership.
The institution was founded in London in 1868 as the "Institution of Surveyors" and has occupied headquarters on the corner of Great George Street and Parliament Square since that date. The institution received its Royal Charter in 1881 and became the "Institution of Chartered Surveyors" in 1930. In 1946 the institution became a royal institution entitled to add "Royal" to its name and, thereby, achieved its present name.
The majority of members are based in the United Kingdom, however there is a strong international membership in many Commonwealth countries such as Canada, Hong Kong and Australia, and membership is growing rapidly in the United States and across Europe, Asia and Africa. The RICS has close links with many national surveying institutions and is a member association of the International Federation of Surveyors (FIG).
Outside of the UK (and particularly in non-Commonwealth countries), the institution generally avoids the use of the full name including "Royal" and styles itself as "RICS".

RICS House Price Balance

Gauge for costs of homes in the United Kingdom. The figure is based on surveyors' opinions on the state of the market, calculated as is the percent of surveyors reporting a rise in prices minus those reporting a fall. A rise in house prices indicates a strong housing market, which generally reflects a strong overall economy.

Risk

Exposure to uncertain change, most often used with a negative connotation of adverse change.

Risk Capital

The capital that an investor does not need to maintain his/her living standard.

Risk Management

The employment of financial analysis and use of trading techniques to reduce and/or control exposure to financial risk.

Risk Position

An asset or liability, which is exposed to fluctuations in value through changes in exchange rates or interest rates.

Risk Premium

Additional sum payable or return to compensate a party for adopting a particular risk.

Risk-Adjusted Return

A measure of how much risk a fund or portfolio takes on to earn its returns, usually expressed as a number or a rating.

Risks

There are risks associated with any market. It means variance of the returns and the possibility that the actual return might not be in line with the expected returns. The risks associated with trading foreign currencies are: market, exchange, Interest rate, yield curve, volatility, liquidity, forced sale, counter party, credit, and country risk.

Roll-Over

The process of extending the settlement value date on an open position forward to the next valid value date.

Rolling over

The substituting of a far option for a near option of the same underlying stock at the same strike/exercise price.

Rollover

A charge that is incurred by Forex investors who roll over their positions to the following delivery date
The fee arises from the difference in interest rates between the two currencies underlying a transaction. Sometimes investors can earn a credit if they are purchasing the currency with the higher of the two interest rates. Investors are often required to maintain certain margin positions with their brokers to earn a credit from rollover

Round trip

Buying and selling of a specified amount of currency.

Rounding Top and Bottom

Similar to a Cup and Handle pattern, a rounding top signifies a rounded resistance line and a bearish overall trend. Alternatively, a rounding bottom is a bullish for which the bottom curve can serve as a support line. Both patterns are best-suited to longer-term analyses.

RPI-Retail Price Index

Retail Price Index measures changes in the prices of goods and services bought for household consumption in the UK. The RPI takes a large sample of retail goods including food, tobacco, household goods and services, transport fares, motoring costs, clothing, and leisure goods and services. An increase in the index means that prices have increased on average (inflation) while a decrease means that prices on the whole have fallen (deflation).

RSI - Relative Strength Index

Relative Strength Index. A technical analysis indicator which measures the magnitude of gains over a given time period against the magnitude of losses over that period. The equation is RSI = 100 - 100 / (1 + RS) where RS = (total gains / n) / (total losses / n) and n = number of RSI periods. The value can range from 1 to 100. Some technical analysts believe that a value of 30 or below indicates an oversold condition and that a value of 70 or above indicates an overbought condition.

LETTER-S

S&P - Standard and Poors

A US firm engaged in assessing the financial health of borrowers. The firm also has generated certain stock indices i.e. S&&P 500.

s.a

seasonally adjusted

Same day transaction

A transaction that matures on the day the transaction takes place.

same store sales

statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more.

SDR

International financing instrument created in 1970 by the International Monetary Fund (IMF) to coincide with the disfavor of the US dollar as the principal currency of the world trade. Also called paper gold, an SDR is neither paper nor gold but an accounting entry. It is not backed by any currency or precious metal, and is used only among governments and IMF for balance Of payments settlements. SDRs are a measure of a country's reserve assets with IMF and, whereas not 'money' in the strict sense, have several characteristics of money as interest bearing assets, store of value, and means of settling indebtedness. They are distributed among all member states of IMF in proportion to each member's quota of IMF dues based on the member's GNP. Used mainly to supplement gold and convertible (hard) currencies in maintaining stability of foreign exchange markets, SDRs are valued on the basis of the value of a basket of 16 major currencies with periodically adjusted weightage reflecting each currency's importance in global trade.

SEC

Securities & Exchange Commission A federal agency that regulates the US financial markets. The SEC also oversees the securities industry and promotes full disclosure in order to protect the investing public against malpractice in the securities markets.

SECO

The State Secretariat for Economic Affairs

Secured Loan

A loan which is backed by assets belonging to the borrower in order to decrease the risk assumed by the lender. The assets may be forfeited to the lender if the borrower fails to make the necessary payments.

Securitization

The process of creating a financial instrument by combining other financial assets and then marketing them to investors.

Sell Limit Order

An order to execute a transaction only at a specified price (the limit) or higher.

Sell Stop Order

A Sell Stop is a Stop Order that is placed BELOW the current dealing Bid price and is not activated until the market Bid price is is at or below the stop price. The sell stop order, once triggered, becomes a market order to sell at the current market price.

Selling Rate

Rate at which a bank is willing to sell foreign currency.

Selling Short

A situation where a currency has been sold with the intent of buying back the position at a lower price to make a profit.

Selloff

A sudden drop in price as a result of widespread selling.

Series

All options of the same class which share a common strike price and expiration date.

Session

Period of trading activity from the time a market opens until it closes. also called trading session.

Settlement

The actual delivery of currencies made on the maturity date of a trade.

Settlement Date

It means the business day specified for delivery of the currencies bought and sold under a forex contract.

Settlement Risk

The risk that one party will deliver and the counterparty will not be able to pay and vice versa.

Share

Certificate representing one unit of ownership in a corporation, mutual fund, or limited partnership.

Shop Price Index

A monthly indicator of price changes at the most popular retail outlets in the United Kingdom. The index takes into account five hundred of the most commonly purchased goods and gives insight into consumer-price inflation. Shop Prices differentiate themselves from British CPI by coming out days before the headline inflation figure. Increases in the BRC Shop Price Index are bullish for the Pound, given that the Bank of England usually raises interest rates to control inflation reflected in the BRC. Conversely, a falling BRC Shop Price Index suggests falling price pressures.

BRC appear in the headlines as the monthly percentage change for the BRC Shop Price Index.

Short

In foreign exchange, when a currency pair is sold, the position is said to be short. It is understood that the primary currency in the pair is 'short', and the secondary currency is 'long'.

Short position

In foreign exchange, when a currency pair is sold, the position is said to be short. It is understood that the primary currency in the pair is 'short', and the secondary currency is 'long'.

Short sale

The sale of a specified amount of currency not owned by the seller at the time of the trade. Short sales are usually made in expectation of a decline in the price.

Short Squeeze

The pressure on short sellers to cover their positions as a result of sharp price increases.

A situation in which the price of the stock rises and investors who sold short rush to buy it to cover their short position and cut their losses. As the price of the stock increases, more short sellers feel compelled to cover their positions. More common than the opposite, long squeeze.

Short-term interest rates

Normally the 90 day rate.

Sidelined

When there is above ordinary interest in a currency pair, other major currency pairs that are thinly traded as a result of this are considered "sidelined".

Sideways

A price which is neither rising or falling; here also called flat.

SITC

Standard International Trade Classification. A system for reporting trade statistics in a common manner.

SL

Order to buy or sell when a given price is reached or passed to liquidate part or all of an existing position.

More potential sellers than buyers, which creates an environment where rapid price falls are likely.

speculation

Speculation is the practice of selecting investments (exposing one's self to risk) with the intention of profiting from price fluctuations.

As opposed to hedging (where investors enter positions to reduce risk in another investment) or gambling (just risk), speculators make informed decisions before choosing to expose one's self to additional risk.

Spike

A large, quick, temporary rise or fall in price.

Spot

(1) Immediate delivery against cash payment, as opposed to future delivery against cash or credit payment

(2) Spot refers to the buying and selling of the currency where the settlement date is two business days forward.

Spot Market

A market in which commodities, such as grain, gold, crude oil, or RAM chips, are bought and sold for cash and delivered immediately. also called cash market.

Spot Commodity

Commodity bought or sold in a spot market, with the expectation that it will be actually delivered on the contracted date.

Spot Price

The current market price of a currency that normally settles in 2 business days (1 day for Dollar/Canada).

Spot Price/Rate

The price at which the currency is currently trading in the spot market.

Spread

This point or pip difference between the bid and ask price of a currency pair.

Square/Flat

Where a client has not traded in that currency or where an earlier deal is reversed thereby creating a neutral (flat) position. example: you bought $500,000 then sold $500,000 = FLAT

Squeeze

Action by a central bank to reduce supply in order to increase the price of a currency.

Stable Market

An active market which can absorb large sale or purchases of currency without having any major impact on the interest rates.

Stagflation

Recession or low growth in conjunction with high inflation rates.

Stake

In economics: a. A share or an interest in an enterprise, especially a financial share. b. Personal interest or involvement: a stake in her children's future.

Standard

A term referring to certain normal amounts and maturities for dealing.

Standard and Poors - S&P

A US firm engaged in assessing the financial health of borrowers. The firm also has generated certain stock indices i.e. S&&P 500.

Sterilization

Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the forex market.

Sterling

Another term for the British currency, 'The Pound'.

Stock Index

Statistical indicator used in measurement and reporting of changes in the market value of a group of stocks/shares. Different stock indices (such as Dow Jones Industrial Average, Russell 1000, Standard And Poor’s 500) track the market differently depending on (1) which averaging method is used to establish the index, (2) whether the index is broad based or narrow based, and (3) whether the averaging method assigns weights on the basis of market price or market capitalization. Also called Share Index

Stocky

Market slang for Swedish Krona.

Stop (loss) Order

Order to buy or sell when a given price is reached or passed to liquidate part or all of an existing position.

Stop Loss Order

Order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor's position. As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for 155.49, which would limit losses should the dollar depreciate, possibly below 155.49.

Stop Order or Stop

An order to buy or to sell a currency when the currency's price reaches or passes a specified level.

Stop Out Price

US term for the lowest accepted price for Treasury Bills at auction.

Stop-Loss order

A Stop Loss is an order to close a trade when the market moves a specified amount.

Straddle

The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date.

Strike Price

Also called exercise price. The price at which an option holder can buy or sell the underlying instrument.

Strike Price- Exercise Price

The price at which an option can be exercised.
The purchase or sale price of underlying stock that an option holder sees upon the exercising an option contract.

Strip

1.A combination of two puts and one call.

2. bond that is issued by the U.S. Treasury for which interest and repayment of principal are separated and sold individually as zero-coupon bonds. The letters STRIP compose an Acronym for Separate Trading of Registered Interest and Principal of Securities.

Structural Unemployment

Unemployment resulting from changes in the basic composition of the economy. These changes simultaneously open new positions for trained workers.

An example of structural unemployment is the technological revolution. Computers may have eliminated jobs, but they also opened up new positions for those who have the skills to operate the computers.

Support Levels

A price at which a currency or the currency market will receive considerable buying pressure.

SVME

Society for Veterinary Medical Ethics

The Society for Veterinary Medical Ethics was founded in 1994 by a group of veterinarians, biomedical researchers, and academics to promote discussion and debate about ethical issues arising in and relevant to veterinary practice. The Society presently has approximately 160 members, including veterinary school deans, officers of the AVMA and state veterinary medical associations, board-certified laboratory animal medicine specialists, biomedical scientists, officers of humane societies, clinical veterinary practitioners, members of veterinary school and university faculties, and veterinary-oriented students. The SVME publishes a newsletter, holds a plenary meeting with lectures and discussions at the AVMA annual convention, distributes information regarding recent publications relevant to veterinary ethics, and actively seeks to increase and elevate the level of discussion of issues in veterinary ethics. Although most members of the SVME are veterinarians, membership is not limited to veterinarians.

Swap

A transaction which moves the maturity date of an open position to a future date.

Swap price

A price as a differential between two dates of the swap.

Swissy

Market slang for Swiss Franc.

LETTER-T

T-Bill

Treasury Bill.

Take Profit Order

An order used by currency traders specifying the exact rate or number of pips from the current price point where to close out their current position for a profit. The rate deemed to be the level where the trader wants to take a profit is sometimes referred to as the "take-profit point".
As the name suggests, take-profit orders are used to lock in profits in the event the rate moves in a favorable direction. For example, if you are long a currency pair position and believe the price will rise to a certain level, but are unsure what it will do beyond that level, placing a take-profit order at that point will automatically close out your position allowing you to lock in profit.

Takeover

Assumption of control of another (usually smaller) firm through purchase of 51 percent or more of its voting shares or stock.

TD

The Toronto-Dominion Bank (TD) (TSX: TD NYSE: TD TYO: 8640 ) is a bank headquartered in Toronto, Ontario. It is one of Canada's Big Five banks, being the second largest bank in the country by assets and market capitalization

An adjustment to price not based on market sentiment but technical factors such as volume and charting.

Terms of Trade

The ratio between export and import price indices.

Terms of Trade Index - New Zealand

Measures how favorable New Zealand 's terms of trade are. The terms of trade figure is calculated as the ratio of an export to the price of an import, per commodity. A higher value is generally bullish for the New Zealand economy, signifying that the products New Zealand exports are worth more than the products it imports. Stronger terms of trade can result from increased demand for New Zealand exports or increased demand for the New Zealand dollar, both of which are beneficial for the New Zealand economy. The figure can be important to market participants because New Zealand relies so highly on exports. The figure is reported in headlines as the percentage change in the index from the previous quarter. A positive change is viewed as favorable for the New Zealand economy, while a negative change is viewed as a bearish sign for the economy.

Tertiary Industry Index - Japan

Evaluates the monthly change in output produced by Japan's service sector. Japan's economy is very export based, because this report excludes manufacturing and only measures service industries catering mainly to domestic needs, the Tertiary Industry Index is a key indicator of domestic activity. The index incorporates data from firms involved with wholesale and retail trade, financial services, health care, real estate, leisure, and utilities. The report excludes industrial manufacturing sectors that tend to be influenced by foreign demand. The tertiary industry index is posted monthly as a percentage change from the previous month's figure.

Theta

A measure of the sensitivity of the price of an option to a change in its time to expiry.

Thin Market

A market in which trading volume is low and in which consequently bid and ask quotes are wide and the liquidity of the instrument traded is low.

Think Tank

A research institute or organization employed to solve complex problems or predict or plan future developments, as in military, political, or social areas.

TIBOR

Tokyo Inter-bank Offered Rate.

TIC-Treasury International Capital

These Treasury data track the flows of financial instruments into and out of the United States. Instruments tracked include Treasury securities, agency securities, corporate bonds, and corporate equities.

Tick

The smallest possible change in a price, either up or down.

TIFFE

Tokyo International Financial Futures Exchange.

Tight Money

A condition where there is a shortage of credit as a result of monetary policy restricting the supply of credit normally through raising interest rates.

Time Deposit

Savings account or CD held in a financial institution, usually a bank, for a fixed term or with the understanding that the customer can withdraw only by giving advanced notice.

timing the market

Attempting to predict future market directions, usually by examining recent price and volume data or economic data, and investing based on those predictions. also called market timing.

Today/Tomorrow

Simultaneous buying of a currency for delivery the following day and selling for the spot day, or vice versa. Also referred to as overnight.

Tom next - Tomorrow Next

Simultaneous buying and selling of a currency for delivery the following day and selling for the next day or vice versa.

Tomorrow Next - Tom/Next

Simultaneous buying and selling of a currency for delivery the following day.

TP

A customer's instructions to buy or sell a currency pair which, when executed, will result in the reduction in the size of the existing position and show a profit on said position.

Tradable amount

Smallest transaction size acceptable.

Trade Date

The date on which a trade occurs.

Trading day

In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. When a trading day ends, all share trading ends and is frozen in time until the next trading day begins. There are several other special circumstances which would lead to a shortened trading day, or no trading day at all.

Trading Range

The spread between the high and low prices traded during a period of time.

Trading Volume

The number of shares, bonds or contracts traded during a given period, for a security or an entire exchange. also called volume.

Tranche

When some part of an issue comes to the market at a different time and possibly at a different price.

Transaction

The buying or selling of securities resulting from the execution of an order.

Transaction Cost

The cost of buying or selling a financial instrument.

Transaction Date

The date on which a trade occurs.

Transaction Exposure

Potential profit and loss generated by current foreign exchange transactions.

Trend Lines

A line drawn that connects either a series of highs or lows in a trend. The trendline can represent either support as in an uptrend line or resistance as in a downtrend line.

Triple Top

A pattern in which a currency has reached a price three times previously, yet has been unable to sustain movements beyond those three peaks. A triple top signifies a strong resistance level.

Trust bank

Japanese bank that combines the functions of a commercial bank, depository institution, and a trust company.

Truth in Lending

A federal law requiring lenders to fully disclose in writing the terms and conditions of a mortgage, including the annual percentage rate and other charges. Also known as Regulation Z.

Turnover

The total volume of all executed transactions in a given time period. The trading volume of the market or of a particular security.

two-way market

The Nasdaq requirement that market makers quote both a bid price and an ask price in every security in which they make a market, and that they execute orders at those prices. also called two-sided market.

Two-Way Price

A quote in the foreign exchange market that indicates a bid and an offer.

Two-way quotation

When a dealer quotes both buying and selling rates for forex transactions.

Two-Way Quote

A type of quote that gives both the bid and the ask price of a security, informing would-be traders of the current price at which they could buy or sell the security. The two-way quote also shows the spread between the bid and the ask, giving traders an idea of the current liquidity in the security (a smaller spread indicates more liquidity).

This type of quote provides more information to users than a last-trade quote, which quotes only the price at which the security last traded.

An example of a two-way quote would be: Citigroup quote of $52.50/$53.30. This tells traders they can currently purchase Citigroup shares for $53.30 or sell them for $52.50. The spread between the bid and the ask is $0.80 ($53.30-$52.50).

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U.S. Dollar Index =USDX

A measure of the value of the U.S. dollar relative to majority of its most significant trading partners. This index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies.

Currently, this index is calculated by factoring in the exchange rates of six major world currencies: the euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc. This index started in 1973 with a base of 100 and is relative to this base. This means that a value of 120 would suggest that the U.S. dollar experienced a 20% increase in value over the time period.

UBS Consumption Indicator - Switzerland

Index for consumer spending in Switzerland. The Consumption Indicator moves with changes in real consumer spending and can be used as a gauge of the strength of domestic demand. A rising indicator value reflects rising consumer spending, which generally leads to economic growth and potentially augur inflationary pressures to come.

The UBS Consumption Indicator is calculated using five specific indicators of spending and expressed in the form of an index. These indicators are: new car sales, business trends in retail, overnight hotel stays by Swiss nationals in Switzerland , the consumer sentiment index and credit card transactions. The headline is the index value for the month. Because the index value is always positive markets compare the current index value to the short and long-term average values in order to gauge Switzerland 's economic health. In the long term the average has been approximately 1.5, but may change with time.

Uncovered

Another term for an open position.

Under-Valuation

An exchange rate is normally considered to be undervalued when it is below its purchasing power parity.

Unit Labor Cost

Unit labor cost or labor cost per unit of manufacturing output is the cost of worker compensation and benefits per unit of manufactured output.

Unrealized Gain/Loss

The theoretical gain or loss on Open Positions valued at current market rates, as determined by the broker in its sole discretion. Unrealized Gains' Losses become Profits/Losses when position is closed.

Unsecured Loan

Backed not by collateral but only by the integrity of the borrower

Up tick

A new price quote that is higher than the preceding quote for the same currency.

Uptick Rule

In the U.S., a regulation whereby a security may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.

USDX=U.S. Dollar Index

A measure of the value of the U.S. dollar relative to majority of its most significant trading partners. This index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies.

Currently, this index is calculated by factoring in the exchange rates of six major world currencies: the euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc. This index started in 1973 with a base of 100 and is relative to this base. This means that a value of 120 would suggest that the U.S. dollar experienced a 20% increase in value over the time period.

Useable Margin

Amount of money in the account that can be used for trading.

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Value added tax

Value Added Tax. A consumption tax that is equal to the aggregate value added to the product at each stage of production.

Value Date

The maturity date of the currency for settlement, usually two business days (one day for Canada) after the trade has occurred.

Value Spot

Normally settlement for two working days from the date the contract is entered into. Value Today Transaction executed for same day settlement; sometimes also referred to as "cash transaction."

Vanilla

A simple option whose terms and conditions do not include any provisions other than exercise style, expiry and strike. To compare with exotic options which have additional terms.

Variation Margin

Additional margin required to bring an account up to the required level due to market fluctuations.

VAT

value added tax
A consumption tax that is equal to the aggregate value added to the product at each stage of production.

Vega

Expresses the price change of an option for a one per cent change in the implied volatility.

Velocity of Money

The speed with which money circulates or turnover in the economy. It is calculated as the annual national income: average money stock in the period.

Victoria Day

(in Canada) the first Monday preceding May 25, observed as a national holiday.

Visible Trade Balance - UK

The difference between imports and exports of goods. Visible Trade differentiates itself from Trade Balance because it does not record intangibles like services, only reporting on physical goods. Because Britain's economy is highly trade driven, Visible Trade data can give critical insight into developments in the economy and into foreign exchange rates.

VIX

The Chicago Board Options Exchange Volatility Index
The ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge".

There are three variations of volatility indexes: the VIX tracks the S&P 500, the VXN tracks the Nasdaq 100 and the VXD tracks the Dow Jones Industrial Average.

VOL - Volatility

Statistical measure of the change in price of a financial currency pair over a given time period.

Volatility

A measure of the amount by which an asset price is expected to fluctuate over a given period. Normally measured by the annual standard deviation of daily price changes (historic). Can be implied from futures pricing, implied volatility.

Volatility - VOL

Statistical measure of the change in price of a financial currency pair over a given time period.

Volatility Swap

A forward contract whose underlying is the volatility of a given product.

This is a pure volatility instrument allowing investors to speculate solely upon the movement of a stock's volatility without the influence of its price. Thus, just like investors trying to speculate on the prices of stocks, by using this instrument investors are able to speculate on how volatile the stock will be.

Vostro Account

Local currency account maintained by a local bank for a foreign (correspondent) bank. For the foreign bank it is a nostro account.

Voting Stock

Common stock (ordinary shares) the ownership of which gives an entity right to vote in the issuing firm's annual general meeting (AGM). Opposite of non-voting stock. Also called voting shares.

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Wage drift

The difference between the basic wage and actual earnings including overtime and bonuses.

Warrant

1. A warrants is a form of traded option. It is a right but not obligation to buy shares in a company at a future date and at a prearranged price.

2. A type of security issued by a corporation (usually together with a bond or preferred stock) that gives the holder the right to purchase a certain amount of common stock at a stated price.

Wash trade

A matched deal which produces neither a gain nor a loss.

wda

working day adjusted
Working day or trading adjustments refer to the correction for differences in the number of working or trading days in a given month or quarter which differ from year to year which will impact upon the level of activity in that month or quarter for flow series or the sort / type of day for stock series.

Whipsaw

To lose money in a volatile market as a result of buying securities before rapid drops and selling before rapid rises.

Wholesale inventories

The stock of unsold goods held by wholesalers. Wholesalers act as intermediaries between manufacturers or importers, and retailers. Wholesalers sell directly to retailers, who strive to act in accordance (ideally) with consumer demand. Consequently, high Wholesale Inventories indicate that unsold goods are piling up, suggesting that retailers are facing lagging consumer demand and unwilling to purchase goods. Conversely, declining Wholesale Inventories suggest retailers are buying more goods to meet strong or rising demand. Because Wholesale Inventories reflect the demand retailers have for their manufacturers' wares, the report offers an early indication of the potential strength of consumer spending.

Wholesale Money

Money borrowed in large amounts from banks and institutions rather than from small investors.

Wholesale Price Index

The Wholesale Price Index (WPI) was first published in 1902, and was one of the more economic indicators available to policy makers until it was replaced by the producer price index (PPI) in 1978.
Wholesale price index is the index that is used to measure the change in the average price level of goods traded in wholesale market. A total of 435 commodities data on price level is tracked.

Wire Transfer

Electronic transfer of funds; usually involves large dollar payments.

Work Force

The total number of people employed or seeking employment in a country or region.

Working day

A day on which the banks in a currency´s principal financial centre are open for business. For FX transactions, a working day only occurs if the bank in both (all relevant currency centers in the case of a cross are open) currencies is working.

World Bank

A bank made up of members of the IMF whose aim is to assist in the development of member states by making loans where private capital is not available.

Write Down

Make a downward adjustment in the accounting value of an asset

Writer

The seller of an option contract. also called grantor or option writer.

WTO

World Trade Organization

The World Trade Organization (WTO) is an international body that seeks to foster free trade and resolve trade issues among member nations. Specifically, the World Trade Organization promotes trade agreements among countries, which provide the rules for the international exchange of goods, services, and intellectual property. World Trade Organization agreements have detailed conditions for resolving trade conflicts; if governments can't resolve trade disputes on their own, they are brought to the World Trade Organization for resolution. One weakness of the World Trade Organization, however, is that its decisions are not accompanied by a significant enforcement mechanism. The World Trade Organization was established in 1995 after the conclusion of the Uruguay Round of trade talks. But the origins of the World Trade Organization extend back much further, to the inauguration of the General Agreement on Tariffs and Trade in 1948.

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XAG

Silver Exchange Rate (ISO)

XAU

Gold Exchange Rate (ISO)

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Yard

A slang word used in the currency industry meaning 'billion'.

Year To Date - YTD

The period beginning January 1st of the current year up until today's date.

Yield

Annual income earned from an investment, expressed usually as a percentage of the money invested.

Yield Curve

In finance, the yield curve is the relation between the interest rate (or cost of borrowing) and the time to maturity of the debt for a given borrower in a given currency.For example, the current U.S. dollar interest rates paid on U.S. Treasury securities for various maturities are closely watched by many traders, and are commonly plotted on a graph such as the one on the right which is informally called "the yield curve."

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Z-Certificate

Certificate issued by the Bank of England to "discount houses" in lieu of stock certificates to facilitate their dealing in the short dated gilt edge securities.

Zero Coupon Bond

A bond that pays no interest. The bond is initially offered at a discount to its redemption value.

Experts are asked for a qualitative assessment of the direction of inflation, interest rates, exchange rates and the stock market in the next six months. Thus the indicator provides a medium-term forecast for the German economy.

ZEW Survey - Euro Zone

A German Firm, the Center for European Economic Research (ZEW), queries financial experts throughout Europe every month in order to make a medium-term forecast about Germany 's economic situation. They ask experts to evaluate the current situation and to predict the future direction of the economy. For all components of the survey, responses are restricted to positive, negative, or unchanged. This simple structure allows the survey to be quick and efficient in terms of turnaround time, as well as easy to understand and interpret.
The first currency quoted in a currency pair on forex. It is also typically considered the domestic currency or accounting currency. For accounting purposes, a firm may use the base currency to represent all profits and losses.

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